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You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of retained earnings is 11.25%, and the tax rate is 40%.  The firm will not be issuing any new stock.  What is Quigley's WACC? a. 10.11% b. 8.15% c. 9.28% d. 7.75%

You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of retained earnings is 11.25%, and the tax rate is 40%.  The firm will not be issuing any new stock.  What is Quigley's WACC? a. 10.11% b. 8.15% c. 9.28% d. 7.75%

Corporate Fin Focused Approach
Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter9: The Cost Of Capital
Section9.8: The Weighted Average Cost Of Capital (wacc)
Problem 3ST
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You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of retained earnings is 11.25%, and the tax rate is 40%.  The firm will not be issuing any new stock.  What is Quigley's WACC?

a. 10.11%
b. 8.15%
c. 9.28%
d. 7.75%
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