Qantas Is Discussing New Ways to Recapitalise the Firm and Raise

question 1

Multiple Choice

Qantas is discussing new ways to recapitalise the firm and raise additional capital. Its current capital structure has a 30% weight in ordinary shares, 10% in preference shares, and 60% in debt. The cost of equity capital is 17%, the cost of preference shares is 11%, and the pretax cost of debt is 8%. What is the weighted average cost of capital for Qantas if its marginal tax rate is 30%?

• A) 10.25%
• B) 10.73%
• C) 9.56%
• D) 9.96%

---

Definitions:

Cold War

A period of geopolitical tension between the Soviet Union and the United States and their respective allies from the late 1940s to the late 1980s, characterized by threats, propaganda, and other measures short of open warfare.

Foreign Power

A country or entity outside of one's own nation that has influence or control over certain aspects of another nation's affairs.

Vietnam

A Southeast Asian country known for its history, including a prolonged conflict known as the Vietnam War involving the United States.

1950s

A decade marked by the post-World War II boom, the beginning of the Cold War, and significant social, economic, and cultural changes.