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What is nike estimated cost of equity

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Reference no: EM132803395

Nike needs you to calculate its cost of equity. Nike's target B/S ratio is 0.5, its cost of debt is 10%, the risk-free rate is 5%, and the market risk premium is 8%. Below are two of Nike's competitors who have similar business operations. Assume the corporate tax rate is 30%. What is Nike's estimated cost of equity?

Competitor Equity Beta B/S Cost of Debt

Competitor 1 1.5 1.0 11%

Competitor 2 1.1 0.6 10%

Reference no: EM132803395

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