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dedylja [7]
3 years ago
7

You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equ

ity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of retained earnings is 10.50%, and the tax rate is 25%. The firm will not be issuing any new stock. What is Quigley's WACC?
Business
2 answers:
san4es73 [151]3 years ago
8 0

Answer:

8.1%

Explanation:

Firstly, let look at the formula for calculating weighted average cost of capital (WACC):

WACC = (D/A) x r_D x (1-t) + (E/A) x r_E + (PE/A) x r_PE, where:

A: Market value of company asset;

D: Market value of company debt;

E: Market value of company equity;

PE: Market value of company preferred equity;

r_D: cost of debt;

r_E: cost of equity/retained earnings;

r_PE: cost of preferred equity;

t: tax rate

Putting all the numbers together, we have:

WACC = 35% x 6.5% x (1-25%) +  55% x  10.5%  + 10% x 6% = 8.1%

Korolek [52]3 years ago
4 0

Answer:

The answer is 8.08%.

Explanation:

We have the WACC is equal to weighted average of After-tax cost of Debt, Cost of preferred shares and Cost of common shares.

WACC = Percentage of Debt in capital structure * (1 - tax rate) * Cost of Debt + Percentage of Preferred share in capital structure * Cost of preferred shares + Percentage of common equity in capital structure * Cost of common equity = 35% * ( 1 - 25%) * 6.5% + 10% * 6.00% + 55% * 10.50% = 8.08%.

So, the WACC is 8.08%.

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Answer and Explanation:

The preparation of the income statement is presented below:

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Revenue           $160,000

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Variable Costs     $50,000

Depreciation       $10,000

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6 0
3 years ago
Jones and smith share the same cuvical in the officce. Jones loves to listen to music on his speakers while working. Smith is no
Talja [164]

Answer:

A. that my answers

Explanation:

Jones and smith share the same cuvical in the officce. Jones loves to listen to music on his speakers while working. Smith is not able to concentrate on his work in the presence of music. Jones recieves benefits worth $200 regardless of whether he listen to music on his speakers or headphones. The cost of headphones is $50. SMith is not abke to conecentrate on his work and suffers damages worth $350 when Jones listens to music without his headphones. Smith does not suffer any damages when Jones listens to music on his headphones.

Suppose the office does not have any rules against listening to music on speakers while working. In thisâ case, if Jones and Smith do notâ communicate, the market outcome is that:

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b. Jones continues to listen to music on his speakers; however, Smith is able to concentrate on his work

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4 0
3 years ago
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vekshin1

Answer:

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The planning stage is that when the operation proposals are recorded, the project deliver-ability and specifications are determined, and the timetable for the program is set. It means creating a set of policies to help direct your team through the stages of project application and completion.

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Furthermore, the pay-structure of every company can helpfully define the organization strategy, support the workflow in the company. Based upon pay structure, the promoters of organizations make a decision regarding the how to motivate the employees for better earnings.

Adding to it, organizational strategy establishing the priorities and setting the direction for our business. It clarifies the path of success and also set the prioritizes that are needed.

Learn more about Pay structure, refer to the link:

brainly.com/question/16006633

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