Q1. Nike is considering a major expansion program. Before proceeding with the expansion, the company must estimate its cost of capital. You are provided with the following Nike debt Information. Thefirms tax rate is 35%. You can use financial websites to download additional data for your calculation of Nikes cost of capital.

Bond maturity	Book value (millions)	Current Price	Price Upon Issuance	YTM
12/15/2023	603	101.65	100.0	0.603%
12/10/2024	500	100.33	102.2	0.998%
4/1/2024	500	102.06	100.0	0.581%
4/15/2024	300	106.80	98.6	0.744%
9/10/2025	400	103.52	90.0	1.024%
4/1/2028	502	116.24	100.0	2.424%
6/15/2029	605	116.15	102.0	3.135%
4/1/2031	398	109.35	103.5	3.334%
4/15/2038	382	119.36	105.0	5.250%
4/15/2048	400	117.78	105.5	5.227%
9/10/2050	400	105.68	100.0	5.018%

To expand its operations, Nike needs to sell $50 million in new 20-year bonds to finance a growth project. It is considering whether to issue coupon bearing bonds or zero-coupon bonds. The YTM on either bond issue will be 7.5 percent. The coupon bond would have a 6.5 percent coupon rate.

Q2. How many of the coupon bonds must XYZ issue to raise the $50 million? How many of the zeroes must it issue?

Q3. In 20 years, what will be the principal repayment due if XYZ issues the coupon bonds? What if it issues the zeroes?

Q4. If the company had the options of issuing any of these three bonds

1. Bond A with a 7% annual coupon, matures in 12 years, and a $1,000 face value.
2. Bond B with a 9% annual coupon, matures in 12 years, and a $1,000 face value.
3. Bond C with an 11% annual coupon, matures in 12 years, and a $1,000 face value.

Each bond has a yield to maturity of 9%. From an investors perspective answer the following questions.

Q5. indicate whether each bond is trading at a premium, at a discount, or at par.

Q6. Calculate the price of each of the three bonds.

Q7. Calculate the current yield for each of the three bonds.