CMA Study Group

JK Corporation's capital structure includes $2,000,000 face value of 8%, 20-year bonds with a current market price of $102. The company also has 300,000 shares of common stock outstanding with a current market price of $26 per share. JK's cost of equity capital is estimated at 11%, and it is subject to a 25% tax rate. Calculate JK Corporation's weighted average cost of capital. 
9.9% 
9.5% 
8.5% 
10.34% 

what is the answer 

------------------------------
Abdallah Abu Khaled
Student
------------------------------

9.9?

------------------------------
Leigh Dishman
Accountant
Plano TX
United States
------------------------------

Original Message:
Sent: 01-27-2019 02:21 PM
From: Abdallah Abu Khaled
Subject: wacc

JK Corporation's capital structure includes $2,000,000 face value of 8%, 20-year bonds with a current market price of $102. The company also has 300,000 shares of common stock outstanding with a current market price of $26 per share. JK's cost of equity capital is estimated at 11%, and it is subject to a 25% tax rate. Calculate JK Corporation's weighted average cost of capital. 
9.9% 
9.5% 
8.5% 
10.34% 

what is the answer 

------------------------------
Abdallah Abu Khaled
Student
------------------------------

YES can you show  me the calculation  
THANK YOU

------------------------------
Abdallah Abu Khaled
Student
------------------------------

Original Message:
Sent: 01-27-2019 06:07 PM
From: Leigh Dishman
Subject: wacc

9.9?

------------------------------
Leigh Dishman
Accountant
Plano TX
United States

Original Message:
Sent: 01-27-2019 02:21 PM
From: Abdallah Abu Khaled
Subject: wacc

JK Corporation's capital structure includes $2,000,000 face value of 8%, 20-year bonds with a current market price of $102. The company also has 300,000 shares of common stock outstanding with a current market price of $26 per share. JK's cost of equity capital is estimated at 11%, and it is subject to a 25% tax rate. Calculate JK Corporation's weighted average cost of capital. 
9.9% 
9.5% 
8.5% 
10.34% 

what is the answer 

------------------------------
Abdallah Abu Khaled
Student
------------------------------

Follow the steps I sent to you earlier

------------------------------
Deon Denton
Accountant
Philadelphia PA
United States
------------------------------

Original Message:
Sent: 01-28-2019 02:40 PM
From: Abdallah Abu Khaled
Subject: wacc

YES can you show  me the calculation
THANK YOU

------------------------------
Abdallah Abu Khaled
Student

Original Message:
Sent: 01-27-2019 06:07 PM
From: Leigh Dishman
Subject: wacc

9.9?

------------------------------
Leigh Dishman
Accountant
Plano TX
United States

Original Message:
Sent: 01-27-2019 02:21 PM
From: Abdallah Abu Khaled
Subject: wacc

JK Corporation's capital structure includes $2,000,000 face value of 8%, 20-year bonds with a current market price of $102. The company also has 300,000 shares of common stock outstanding with a current market price of $26 per share. JK's cost of equity capital is estimated at 11%, and it is subject to a 25% tax rate. Calculate JK Corporation's weighted average cost of capital. 
9.9% 
9.5% 
8.5% 
10.34% 

what is the answer 

------------------------------
Abdallah Abu Khaled
Student
------------------------------

iam trying but i can't get it sorry 
2000000*8(1-.25)=12000000 then 300000*$26*11%= 85800
what you mean when you said""add the two numbers to get the wacc ""

------------------------------
Abdallah Abu Khaled
Student
------------------------------

Original Message:
Sent: 01-28-2019 02:46 PM
From: Deon Denton
Subject: wacc

Follow the steps I sent to you earlier

------------------------------
Deon Denton
Accountant
Philadelphia PA
United States

Original Message:
Sent: 01-28-2019 02:40 PM
From: Abdallah Abu Khaled
Subject: wacc

YES can you show  me the calculation
THANK YOU

------------------------------
Abdallah Abu Khaled
Student

Original Message:
Sent: 01-27-2019 06:07 PM
From: Leigh Dishman
Subject: wacc

9.9?

------------------------------
Leigh Dishman
Accountant
Plano TX
United States

Original Message:
Sent: 01-27-2019 02:21 PM
From: Abdallah Abu Khaled
Subject: wacc

JK Corporation's capital structure includes $2,000,000 face value of 8%, 20-year bonds with a current market price of $102. The company also has 300,000 shares of common stock outstanding with a current market price of $26 per share. JK's cost of equity capital is estimated at 11%, and it is subject to a 25% tax rate. Calculate JK Corporation's weighted average cost of capital. 
9.9% 
9.5% 
8.5% 
10.34% 

what is the answer 

------------------------------
Abdallah Abu Khaled
Student
------------------------------

Remember the bond was issued at premium, cannot assist you any further have to study now, you should review the tutorial again for clarification

------------------------------
Deon Denton
Accountant
Philadelphia PA
United States
------------------------------

Original Message:
Sent: 01-28-2019 04:30 PM
From: Abdallah Abu Khaled
Subject: wacc

iam trying but i can't get it sorry
2000000*8(1-.25)=12000000 then 300000*$26*11%= 85800
what you mean when you said""add the two numbers to get the wacc ""

------------------------------
Abdallah Abu Khaled
Student

Original Message:
Sent: 01-28-2019 02:46 PM
From: Deon Denton
Subject: wacc

Follow the steps I sent to you earlier

------------------------------
Deon Denton
Accountant
Philadelphia PA
United States

Original Message:
Sent: 01-28-2019 02:40 PM
From: Abdallah Abu Khaled
Subject: wacc

YES can you show  me the calculation
THANK YOU

------------------------------
Abdallah Abu Khaled
Student

Original Message:
Sent: 01-27-2019 06:07 PM
From: Leigh Dishman
Subject: wacc

9.9?

------------------------------
Leigh Dishman
Accountant
Plano TX
United States

Original Message:
Sent: 01-27-2019 02:21 PM
From: Abdallah Abu Khaled
Subject: wacc

JK Corporation's capital structure includes $2,000,000 face value of 8%, 20-year bonds with a current market price of $102. The company also has 300,000 shares of common stock outstanding with a current market price of $26 per share. JK's cost of equity capital is estimated at 11%, and it is subject to a 25% tax rate. Calculate JK Corporation's weighted average cost of capital. 
9.9% 
9.5% 
8.5% 
10.34% 

what is the answer 

------------------------------
Abdallah Abu Khaled
Student
------------------------------

8.5%

------------------------------
Rachael Smith
Other
Sandy UT
United States
------------------------------

Original Message:
Sent: 01-28-2019 02:40 PM
From: Abdallah Abu Khaled
Subject: wacc

YES can you show  me the calculation
THANK YOU

------------------------------
Abdallah Abu Khaled
Student

Original Message:
Sent: 01-27-2019 06:07 PM
From: Leigh Dishman
Subject: wacc

9.9?

------------------------------
Leigh Dishman
Accountant
Plano TX
United States

Original Message:
Sent: 01-27-2019 02:21 PM
From: Abdallah Abu Khaled
Subject: wacc

JK Corporation's capital structure includes $2,000,000 face value of 8%, 20-year bonds with a current market price of $102. The company also has 300,000 shares of common stock outstanding with a current market price of $26 per share. JK's cost of equity capital is estimated at 11%, and it is subject to a 25% tax rate. Calculate JK Corporation's weighted average cost of capital. 
9.9% 
9.5% 
8.5% 
10.34% 

what is the answer 

------------------------------
Abdallah Abu Khaled
Student
------------------------------

You didn't submit your calculation, so I am going to lead you to the answer bond $2000,000 x 8(1-tax rate), common stock $300,000 x $26 x 11%, add the two numbers to get the wacc

------------------------------
Deon Denton
Accountant
Philadelphia PA
United States
------------------------------

Original Message:
Sent: 01-27-2019 02:21 PM
From: Abdallah Abu Khaled
Subject: wacc

JK Corporation's capital structure includes $2,000,000 face value of 8%, 20-year bonds with a current market price of $102. The company also has 300,000 shares of common stock outstanding with a current market price of $26 per share. JK's cost of equity capital is estimated at 11%, and it is subject to a 25% tax rate. Calculate JK Corporation's weighted average cost of capital. 
9.9% 
9.5% 
8.5% 
10.34% 

what is the answer 

------------------------------
Abdallah Abu Khaled
Student
------------------------------

The total capital structure is $2,000,000 (bond) plus $7,800,000 total $9,800,000. Calculate debt to equity ratio which is the weight, equity 80%, debt 20%. Multiply the weight for equity (80% x 11%) plus debt weight 20% 8(1- tax rate) will give you WACC

------------------------------
Deon Denton
Accountant
Philadelphia PA
United States
------------------------------

Original Message:
Sent: 01-27-2019 02:21 PM
From: Abdallah Abu Khaled
Subject: wacc

JK Corporation's capital structure includes $2,000,000 face value of 8%, 20-year bonds with a current market price of $102. The company also has 300,000 shares of common stock outstanding with a current market price of $26 per share. JK's cost of equity capital is estimated at 11%, and it is subject to a 25% tax rate. Calculate JK Corporation's weighted average cost of capital. 
9.9% 
9.5% 
8.5% 
10.34% 

what is the answer 

------------------------------
Abdallah Abu Khaled
Student
------------------------------

Thanks a lot I just review wacc and finally I understand thank you 👍

------------------------------
Abdallah Abu Khaled
Student
------------------------------

Original Message:
Sent: 01-29-2019 09:21 AM
From: Deon Denton
Subject: wacc

The total capital structure is $2,000,000 (bond) plus $7,800,000 total $9,800,000. Calculate debt to equity ratio which is the weight, equity 80%, debt 20%. Multiply the weight for equity (80% x 11%) plus debt weight 20% 8(1- tax rate) will give you WACC

------------------------------
Deon Denton
Accountant
Philadelphia PA
United States

Original Message:
Sent: 01-27-2019 02:21 PM
From: Abdallah Abu Khaled
Subject: wacc

JK Corporation's capital structure includes $2,000,000 face value of 8%, 20-year bonds with a current market price of $102. The company also has 300,000 shares of common stock outstanding with a current market price of $26 per share. JK's cost of equity capital is estimated at 11%, and it is subject to a 25% tax rate. Calculate JK Corporation's weighted average cost of capital. 
9.9% 
9.5% 
8.5% 
10.34% 

what is the answer 

------------------------------
Abdallah Abu Khaled
Student
------------------------------