Compute the weighted average cost of capital of the firm

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Nike has 100 million shares of preferred stock outstanding, 475 million shares of common stock outstanding, and the face value of their debt on the balance sheet is $12 billion. Their 20--year debt has a 3.5% coupon rate and the latest quote on their bonds outstanding is 98.25. Nike’s common stock is currently selling for $54.50 per share and their cost of equity capital is 10%. Nike’s preferred stock is selling for $65 per share and pays an annual dividend of $5.20. If the marginal tax rate of the firm is 40%, compute the weighted average cost of capital of the firm

Reference no: EM131284259

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