Nike Inc

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Issue:

Business

 

Written by:

Marcella P

 

Date added:

June 10, 2016

 

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Grade:

A

 

No of pages / words:

6 / 1658

 

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7775 times

 

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Essay content:

I found what interest Nike’s has to pay to finance its debt. The shoe company finances its debt with bond which follows those characteristics: |Coupon Rate |6.75% (Paid semi-annually) | |Issued |07/15/1996 | |Maturity |07/15/21 | |Current Price |$95.60 | Because the bond interests are paid semi-annually I first calculated their semi-annual cost: |Payment |(6...
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This yield represents the cost of issuing the bonds for the company before taxes. Nike is in the 35% bracket, but the company also pays state taxes. Those varied from 2.5% to 3.5% depending of the years, so I counted them as an average of 3%. Nike’s Cost of Debt after Taxes Kd = 7.13 x [1-(35+3)%] Kd = 4...
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