IF POSSIBLE, PLEASE UPLOAD THE EXCEL FILE WITH THE CALCULATIONS. THANK YOU 1. Ch
ID: 2715689 • Letter: I
Question
IF POSSIBLE, PLEASE UPLOAD THE EXCEL FILE WITH THE CALCULATIONS. THANK YOU
1. Choose a publicly traded company that has relatively simple and streamlined financial statements. Nike, Inc.
2. Look up Nike’s most recent financial statements on at finance.yahoo.com. Based on the most recent balance sheet, what percentage of Nike, Inc. is debt-based and what percentage is equity-based?
3. Look up Nike’s historical prices. Find the average annual return on the stock.
4. Find the interest expense on the income statement and divide by long-term debt. What does it look like Nike’s interest rate on debt is?
5. Use your answer from #3 as cost of equity, your answer from #4 as cost of debt, and the percentages from part 2 as weights. What is the WACC?
6. Now calculate market capitalization as stock price multiplied by # shares outstanding.
7. Go to www.finra.org/marketdata and click the Bonds link. Find the bonds outstanding for Nike, Inc. How many different bond issues are out there and what are their yields? Calculated a weighted average of the different bonds YTMs. Also determine the total market value of the bonds outstanding.
8. Use market capitalization and the total market value of the bonds outstanding to find market-value based weights for WACC.
9. Download historical S&P 500 index values and find the average annual return on the S&P 500 (you can get this data from finance.yahoo.com). Look up current 30-day Treasury Bill rates. Use the average annual return from the S&P 500 as the expected return on the market, 30-day Treasury Bill rates as the risk-free rate, and Nike’s beta to find cost of equity using CAPM.
10. Use your weighted average from #7 and your answer from #9,respectively, as cost of debt and cost of equity. Use the weights from #8. Calculate WACC.
11. Discuss the different values from #10 and #5. Which one do you think more accurately reflects Nike’s cost of capital and why?
Explanation / Answer
https://in.finance.yahoo.com/q/bs?s=NKE., this links show the latest balance sheet of Nike. Inc. Various information is missing
Ques. No As on 31.08.2015 (in thousands) 2) Percentage of Equity and debt based Total Assets 20766000 Total Liabilities 7872000 Debt/Equity Total liabilities/Total assets 0.379081 % Debt- based 0.38 38 Equity based 0.62 62 So 38% is debt based and 62% is equity based) 4) Interest expenses in year 2015 Nil according to the website https://finance.yahoo.com/q/is?s=NKE+Income+Statement&annual Long term debt 10790 Million So percentage is 0.361445783 5) As information of interest is not provided on website this question cannot be answered