Please check CAPM calculations for Nike, Sony and McDonalds.

Please check CAPM calculations for Nike, Sony and McDonalds.

CAPM would calculate Nike’s current cost of equity at 2.859%

RE = RF + Beta(RM – RF)

RE = 20% + 0.91(7.50% – 20%)

RE = 2.859%

This calculation is based on a variable market rate of return and a risk free rate. Using a variable market rate of return may be appropriate in comparing companies assuming the market rate is risk-adjusted.

CAPM would calculate Sony’s current cost of equity at 2.148%

RE = RF + Beta(RM – RF)

RE = 20% + 1.48(8.50% – 20%)

RE = 2.148%

CAPM would calculate McDonald Corporation current cost of equity at 2.036%

RE = RF + Beta(RM – RF)

RE = 20% + 0.36(9.50% – 20%)

RE = 2.036%

Please check CAPM calculations for Nike, Sony and McDonalds.