Jack in the Box Wacc
Capital Structure
General View
Table 4
Capital Structure (Million of USD)
Market Cap 1,134.07
ST Debt 13.78
LT Debt 352.63
Pref. E -
Total 1,500.48
Graph 2 According to the 2010 annual report, the weighted-average outstanding shares were 55,070 thousand. The stock price of Oct, 2010 is 20.59. So, the market Cap of equity equals to 55.07 Million * 20.59 = 1134.07 Million. The Short-term Debt and Long term Debt come from the annual report and according to the notes of the report, the market fair value was really close to its book value and thus here I use its book value. Jack in the Box didn’t issue any preferred equity, so here is zero.
Graph 3 I calculate the leverage ratio using total debt divided by total equity. It showed that the lev-erage ratio of Jack in the Box decreased in re-cent years. The ratio is below one and shows a conservative attitude in operation and may slow down the growth of the company. The Calculation of WACC
Table 5 Equity Debt Pref. E
Weight 75.58% 24.42% 0.00%
Cost 10.96% 1.84% 0.00%
W x C 8.28% 0.45% 0.00%
WACC 8.73%
WACC=Weight of Equity * Cost of Equity+ Weight of Debt * Cost of Debt + Weight of Pre-ferred Equity* Cost of Pref. E
Table 6
Cost of Debt (After-tax) 1.84%
Effective Tax Rate 33.77%
ST Debt to total Debt 3.76%
Pre-tax Cost of ST Debt 2.79%
LT Debt to total Debt 96.24%
Pre-tax Cost of LT Debt 2.78%
Total Debt 366.41
The tax rate used here is the effective tax rate of 2010 from the annual report. And the Pre-tax Cost of LT and ST term rates were the weighted average interest rate for LT and ST Debt on Oct.3. 2010 got from the annual report.
Cost of Debt (After-tax) = (1-Tax)* (ST Debt to total Debt* Pre-tax Cost of ST Debt+ LT Debt to total Debt* Pre-tax Cost of LT Debt
Table 7
Cost of Equity 10.96%
Risk Free Rate 2.51%
Beta 0.97
Risk Premium 8.72%
Expected Market
General View
Table 4
Capital Structure (Million of USD)
Market Cap 1,134.07
ST Debt 13.78
LT Debt 352.63
Pref. E -
Total 1,500.48
Graph 2 According to the 2010 annual report, the weighted-average outstanding shares were 55,070 thousand. The stock price of Oct, 2010 is 20.59. So, the market Cap of equity equals to 55.07 Million * 20.59 = 1134.07 Million. The Short-term Debt and Long term Debt come from the annual report and according to the notes of the report, the market fair value was really close to its book value and thus here I use its book value. Jack in the Box didn’t issue any preferred equity, so here is zero.
Graph 3 I calculate the leverage ratio using total debt divided by total equity. It showed that the lev-erage ratio of Jack in the Box decreased in re-cent years. The ratio is below one and shows a conservative attitude in operation and may slow down the growth of the company. The Calculation of WACC
Table 5 Equity Debt Pref. E
Weight 75.58% 24.42% 0.00%
Cost 10.96% 1.84% 0.00%
W x C 8.28% 0.45% 0.00%
WACC 8.73%
WACC=Weight of Equity * Cost of Equity+ Weight of Debt * Cost of Debt + Weight of Pre-ferred Equity* Cost of Pref. E
Table 6
Cost of Debt (After-tax) 1.84%
Effective Tax Rate 33.77%
ST Debt to total Debt 3.76%
Pre-tax Cost of ST Debt 2.79%
LT Debt to total Debt 96.24%
Pre-tax Cost of LT Debt 2.78%
Total Debt 366.41
The tax rate used here is the effective tax rate of 2010 from the annual report. And the Pre-tax Cost of LT and ST term rates were the weighted average interest rate for LT and ST Debt on Oct.3. 2010 got from the annual report.
Cost of Debt (After-tax) = (1-Tax)* (ST Debt to total Debt* Pre-tax Cost of ST Debt+ LT Debt to total Debt* Pre-tax Cost of LT Debt
Table 7
Cost of Equity 10.96%
Risk Free Rate 2.51%
Beta 0.97
Risk Premium 8.72%
Expected Market