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. 
8.36% 

b. 
9.17% 

c. 
12.19% 

d. 
8.87% 

e. 
10.08% 
Aftertax cost of debt=6.5*(1tax rate)
=6.5*(10.4)=3.9%
WACC=Respective costs*Respective weight
=(3.9*0.35)+(0.10*6)+(0.55*14.75)
=10.08%(Approx).
You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt,...
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