NKE
Nike Inc
Price:  
74.62 
USD
Volume:  
11,900,996.00
United States | Textiles, Apparel & Luxury Goods
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Nike WACC - Weighted Average Cost of Capital

The WACC of Nike Inc (NKE) is 8.7%.

The Cost of Equity of Nike Inc (NKE) is 9.05%.
The Cost of Debt of Nike Inc (NKE) is 4.30%.

Range Selected
Cost of equity 7.70% - 10.40% 9.05%
Tax rate 14.60% - 15.80% 15.20%
Cost of debt 4.00% - 4.60% 4.30%
WACC 7.4% - 9.9% 8.7%
WACC

Nike WACC calculation

Category Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.84 0.99
Additional risk adjustments 0.0% 0.5%
Cost of equity 7.70% 10.40%
Tax rate 14.60% 15.80%
Debt/Equity ratio 0.07 0.07
Cost of debt 4.00% 4.60%
After-tax WACC 7.4% 9.9%
Selected WACC 8.7%

Nike's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for Nike:

cost_of_equity (9.05%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.84) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.