Nike

1. What is yield to maturity for Nikes bonds 1. Why is it important to forecast a firms follow of capital? What does it protection? Is the WACC set by postors or by managers? WACC is basically the go astray of return required by a capital provider in exchange for not winning on another(prenominal) enthronization in another project with similar risk. In both(prenominal) ways, you washbowl describe it as opportunity monetary value. WACC is the lower unsex return required by capital providers and managers should totally devote in projects that give return in excess of WACC. WACC takes into invoice all capital resources such as common stock, preffered stock, bonds and whatsoever other long-term debt. Usually a political partys assets are financed by either debt or uprightness. By fetching a weighted average we can take on total out of the closet how much interest a company has to pay for every(prenominal) dollar it finances. The WACC is set by investors and not the managers and because of that we can only estimate it. 2. What was your estimate of WACC? What mistakes did Joanna Cohen make in her digest? Which rule is best for calculating the cost of equity? cost of equity =I utilise the 20 year at 5.74%+ geometric mean=5.9%x most recent beta .69=9.81% approach of Debt I use Yield to maturity to find cost of debt From Exhibit 4 PV= 95.60 N=40 (20years x 2) since its paid semiannually Pmt=-3.375 (6.

75/2) FV=-100 Comp I = 3.58% (semiannual) 7.16% (annual) After levy cost of debt = 7.16%(1-38%) = 4.44% E = market place place take e xplanation of the firms equity To find Mar! ket value of rightfulness you breed share price by amount of shares $42.09x273.3= 11503. D = market value of the firms debt I valued book value of debt at 1,291 Then divide 11503/(11503+1291)=89.9 so the weight for debt is 10.1 percent When I calculated WACC 4.44%x.101+9.81%x.899= 9.27% Cohen made a few mistakes when she calculated her WACC. First, she used historical data in estimating cost of debt. She ended up dividing interest expenses by the average balance of debt to communicate...If you want to buzz off a full essay, order it on our website: OrderCustomPaper.com

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