- (Use the excel workbook that accompanies this assignment to answer this question.)
JC Penney (JCP) is a public corporation headquartered in Plano, Texas, that operates department stores. In recent years JCP has struggled financially. Many observers expect the firm to file for bankruptcy in the near future.
Use the data in the worksheet to compute JCPs weighted average cost of capital (WACC). Assume you are calculating WACC on 20 November 2018.
JC Penney WACC Calculation # of Bonds Bond Maturity Date Bond Coupon Rate or End-of-day Price on 20-Nov-18 # of Shares Bonds: Bond 1 Bond 2 Bond 3 Bond 4 15-Nov-2021 15-Nov-2025 15-Nov-2037 15-Nov-2097 6.50% 8.60% 7.00% 8.00% 660,000 400,000 700,000 500,000 850.10 555.45 324.67 380.00 Common Stock: 315,400,000 1.30 Totals: RWACC RWACC JCP = (B/V)(R8,1/1-T) + (B2/V)(Rg 2/(1-T) + (B./V)(Rg 2/(1-T) + (B4/V)(Rg.4/(1-T) + (S/V)(Rs) Effective Tax Rate, 2018: T 0.100 Cost of Equity Data: RF, 11/20/18 Ry-R 0.027 0.070 Mis proxied by the Vanguard Total Stock Market Index 11/1/13 12/1/13 10.19 9.15 85.37 87.25 2/1/14 31/1/14 4/1/148 7.28 8.62 .52 89.06 9 9.12 89.57 6/1/14 8/1/14 10.80 95.79 10/1/14 11/1/14 12/1/14 8.01 6.48 98.75 98.20 2/1/15 8.50 101.53 4/1/15 8.30 100.96 6/1/15 8.47 100.13 8/1/15 9.11 96.04 10/1/15 11/1/15 12/1/15 9.17 7.97 6.66 100.61 101.21 98.50 2/1/16 9/1/16 4/1/16 11.06 99.56 6/1/16 8.88 102.26 8/1/16 9.43 107.01 10/1/16 11/1/169 12/1/16 8.59 .47 2.31 104.88 109.59 111.07 2/1/17 6.34 118.04 4/1/17 5.38 119.36 6/1/17 4.65 121.15 8/1/17 3.87 124.19 10/1/17 2.80 129.98 12/1/17 2/1/18 4/1/18 2.91 135.11 SV 6/1/18 7/1/18 8/1/18 2.34 2.45 1.77 139.17 144.40 149.36 10/1/18 1.47 138.56 111181.44137.40 JC Penney WACC Calculation # of Bonds Bond Maturity Date Bond Coupon Rate or End-of-day Price on 20-Nov-18 # of Shares Bonds: Bond 1 Bond 2 Bond 3 Bond 4 15-Nov-2021 15-Nov-2025 15-Nov-2037 15-Nov-2097 6.50% 8.60% 7.00% 8.00% 660,000 400,000 700,000 500,000 850.10 555.45 324.67 380.00 Common Stock: 315,400,000 1.30 Totals: RWACC RWACC JCP = (B/V)(R8,1/1-T) + (B2/V)(Rg 2/(1-T) + (B./V)(Rg 2/(1-T) + (B4/V)(Rg.4/(1-T) + (S/V)(Rs) Effective Tax Rate, 2018: T 0.100 Cost of Equity Data: RF, 11/20/18 Ry-R 0.027 0.070 Mis proxied by the Vanguard Total Stock Market Index 11/1/13 12/1/13 10.19 9.15 85.37 87.25 2/1/14 31/1/14 4/1/148 7.28 8.62 .52 89.06 9 9.12 89.57 6/1/14 8/1/14 10.80 95.79 10/1/14 11/1/14 12/1/14 8.01 6.48 98.75 98.20 2/1/15 8.50 101.53 4/1/15 8.30 100.96 6/1/15 8.47 100.13 8/1/15 9.11 96.04 10/1/15 11/1/15 12/1/15 9.17 7.97 6.66 100.61 101.21 98.50 2/1/16 9/1/16 4/1/16 11.06 99.56 6/1/16 8.88 102.26 8/1/16 9.43 107.01 10/1/16 11/1/169 12/1/16 8.59 .47 2.31 104.88 109.59 111.07 2/1/17 6.34 118.04 4/1/17 5.38 119.36 6/1/17 4.65 121.15 8/1/17 3.87 124.19 10/1/17 2.80 129.98 12/1/17 2/1/18 4/1/18 2.91 135.11 SV 6/1/18 7/1/18 8/1/18 2.34 2.45 1.77 139.17 144.40 149.36 10/1/18 1.47 138.56 111181.44137.40
