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What is Quigley's WACC?

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11. 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 12.00%, and the tax rate is 40%. The firm will not be issuing any new stock. What is Quigley's WACC?

9.34%
9.51%
8.99%
7.62%
8.57%

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Solution Summary

This solution provides a very brief calculation of WACC applied to the problem of the Quigley Company.

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