1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
sashaice [31]
3 years ago
6

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 common from retained earnings is 11.25%, and the tax rate is 40%. The firm will not be issuing any new common stock. Quigley's WACC is closest to: 8.15% 8.48% 8.82% 9.17% 9.54%
Business
1 answer:
taurus [48]3 years ago
3 0

Answer:

8.15 %

Explanation:

Weighted Average Cost of Capital (WACC) is the business Cost of permanent sources of finance pooled together. It shows the risk of the business and is used to evaluate projects.

WACC = Cost of Equity x Weight of Equity + Cost of Preferred Stock x Weight of Preferred Stock + Cost of Debt x Weight of Debt

<u>Remember to use the After tax cost of debt :</u>

After tax cost of debt = Interest x ( 1 - tax rate)

                                    = 6.50% x (1 - 0.40)

                                    = 3.90 %

therefore,

WACC = 11.25% x 55% + 6.00% x 10% +  3.90 % x 35%

            = 8.15 %

Thus,

Quigley's WACC is closest to 8.15 %.

You might be interested in
Suppose that you won a lawsuit and were awarded a series of payments of $10,000 a year for 10 years. Assuming an interest rate o
DochEvi [55]
Okay. So it's $10,000 per year, which is $100,000 in 10 years. I'm not so sure how to solve it exactly, but I found a lump sum calculator online. I put the information on that and according to the calculator, today's payment in a lump sum would be $50,894.93. The future value is $100,000 with 10 periods (in this case, years) of the interest rate of 7% once per year. I think that the answer is $50,894.93.
4 0
3 years ago
How old can you be to get your license?<br>A) 16<br>B) 18<br>C) 19 ​
jekas [21]

Answer: 18

Explanation: Legal age to drive

7 0
3 years ago
Read 2 more answers
To balance columns, a _____ is inserted at the end of the text on a page.
Radda [10]
Salutations!

To balance columns, a _____ is inserted at the end of the text on a page.

To balance columns, a continuous section break is inserted at the end of the text on a page.

Hope I helped!
3 0
3 years ago
In 2018, preferred shareholders elected to convert 4.58 million shares of preferred stock ($39 million book value) into common s
In-s [12.5K]

Answer:

The answer is given below;

Explanation:

Preferred Stock   Dr.$39,000,000

Common Stock    Cr.$33,000,000

Paid in capital in excess of par-Common stock  (39,000,000-33,000,000)        Cr.$6,000,000  

As the book value of preferred stock is greater than the price paid at the time of conversion into common stock,therefore excess amount is paid in capital in excess of par for common stocks.As the preferred stock is reduced by their book value,therefore it is debited and common stock is credited with its cost.  

5 0
3 years ago
During the elaboration stage of an organization: Group of answer choices change management is the most important skill that huma
Leno4ka [110]

Answer:

change management is the most important skill that human resource personnel contribute.

Explanation:

Elaboration stage of an organisation is also called the maturity stage. It is characterised by different units being involved in making decisions.

This slows down speed of decision making.

At this stage there is a need for revitalisation and change in order to make the organisation more efficient.

Change management is the process by which employees in an organisation are prepared and supported when there are far reaching improvements to organisation structure.

It ensures a smooth transition by providing needed information and reducing the stress associated with organisational change.

This is a key skill needed by human resource personnel fusing the elaboration stage

7 0
3 years ago
Other questions:
  • Credit unions are not subject to federal regulations.<br> T/F
    10·2 answers
  • While conducting an audit, Larson Associates, CPAs, failed to detect material misstatements included in its client's financial s
    9·1 answer
  • Suppose that consumers would like to purchase 10 million dvds but only 5 million are available. in order for the market to coord
    8·1 answer
  • An online store promises to deliver any order costing over $60 within 24 hours. It uses this strategy to increase the volume of
    10·1 answer
  • Bill Dukes has $100,000 invested in a 2-stock portfolio. $50,000 is invested in Stock X and the remainder is invested in Stock Y
    14·1 answer
  • IMA GOIN BROKE FROM THESE GIVAWAYS BUT HERES MORE POINTS
    10·2 answers
  • A 13-year, 6 percent coupon bond pays interest semiannually. The bond has a face value of $1,000. What is the percentage change
    6·1 answer
  • The next dividend payment by Wyatt, Inc., will be $2.30 per share. The dividends are anticipated to maintain a growth rate of 4.
    5·1 answer
  • Rocky Mountain Bottling Company produces a soft drink that is sold for a dollar. At production and sales of 800,000 units, the c
    8·1 answer
  • Cash equivalents would not include?:
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!