You Were Hired as a Consultant to Quigley Company,whose Target

question 18

Multiple Choice

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)8.15%
• B)8.48%
• C)8.82%
• D)9.17%
• E)9.54%

---

Definitions:

Employee Commitment

Refers to the level of loyalty and dedication an employee feels toward their organization.

Referent Power

A form of power that stems from personal attributes and the respect or admiration one commands from others.

Organizational Politics

The use of power, negotiation, and alliances within an organization to achieve personal or organizational goals.

Self-Interests

The consideration of one's personal advantage or profit, often without regard for others.