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:

Drought

Drought is a prolonged period of abnormally low rainfall, leading to a shortage of water that adversely affects crops, animals, and human populations.

Earthquakes

Natural seismic events resulting from the sudden release of energy in the Earth's crust, leading to ground shaking and sometimes causing significant damage and loss of life.

Secondary Succession

The ecological recovery process that occurs in an environment after a disturbance that didn't remove the soil.

Polluted Stream

A body of flowing water that is contaminated with harmful chemicals, waste, or microorganisms, affecting its quality and the health of ecosystems it supports.