Read the case study “Nike, Inc: Cost of Capital” and calculate the cost of capital. LinK:https://www.thecasecentre.org/programmeAdmin/courses?id=1332621&pdid=1658&opid=841445 You have to critically...

1. The Cost of Capital for Nike Incorporation is calculated based on the proportion of debt and equity raised by the company. The analyst has first calculated the cost of debt and then calculated the cost of equity separately and then calculated the weighted average cost of capital (WACC) based on the proportion of debt and equity. The cost of debt has been calculated using the interest expense divided by the average debt balance. For calculating the cost of equity, the Capital Asset Pricing Model (CAPM) has been used by the analyst in calculating the cost of equity for Nike Incorporation.
Things I would change: In calculating the cost of debt, the analyst has used the tax rate prevailing in the United States as the tax benefit on the interest paid by the Nike Incorporation. Since the debt was raised in Japan through Notes Payable, hence the tax rate of Japan should be taken to compute the correct cost of debt. In calculating the risk-free rate, I...