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Essay Details:
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Essay text:
I used the yield on 20-year U.S. Treasuries as the risk-free rate, 5.74%. To estimate the market risk premium I used the arithmetic mean of 7.50%. I used Nike's average beta, 0.80.
.0574 + (.075 - .0574).8 = 7.1%
WACC = KdWd(1 - T) + KeWe
WACC = (.028 x .27) + (.071 x .73) = 5.9%
Calculate WACC using market values:
The weight of debt is calculated by adding the current portion of long-term debt, notes payable and long-term debt, and dividing it by the sum of debt and equity.
$5.4 + 855.3 + 435.9 = $1,296.6 $1,296.6 / (1,296.6 + 11,427.43) = .10 = 10%
The weight of equity is calculated by dividing the market value of equity (price per share x # shares outstanding) by the sum of the market value of debt and equity...
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Common topics in this essay:
- DEBT-EQUITY MIX SIMULATION
- Debt & Equity Instruments
- Debt Equity Mix
- Debt Equity Of India,Us,Uk
- Debt Financing
- Debt Or Equity
- Debt Policy At Ust Inc
- Debt Vs. Equity Financing
- Debt vs Equity Instruments
- Debt-Equity Mix Simulation Summary
- Debt
- Determining the Debt-Equity Mix Summary
- Debt
- long term memory notes
- Student Debt
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