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

question 32

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 14.75%,and the tax rate is 40%.The firm will not be issuing any new stock.What is Quigley's WACC? Round final answer to two decimal places.Do not round your intermediate calculations.

• A) 12.19%
• B) 8.36%
• C) 9.17%
• D) 10.08%
• E) 8.87%

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Definitions:

Consumer Price Index

An evaluative measure that calculates the weighted mean cost of a range of consumer services and goods, from food to medical care and transportation.

Purchasing Power

The real value of money, reflecting the quantity of goods or services that one unit of money can buy, inversely related to the level of prices in the economy.

Producer Price Index

An economic measure reflecting the average rate of change in the prices at which domestic producers sell their goods over time.

Consumer Price Index

A tool that analyzes the weighted mean prices for an assortment of consumer necessities, such as healthcare, transportation, and food items.