1 2 P14-22 Modified (changes from the text are in bold) 3 5 6 7 The target capital structure for QM Industries is 40 percent common stock, 10 percent preferred stock, and 50 percent debt. If the cost of common equity for the firm is 13 percent, the cost of preferred stock is 8 percent, and the before-tax cost of debt is 6 percent, and the firm's tax rate is 24 percent, what is QM's wieghted average cost of capital? 9 10 Hint: see Figure 14.1 on page 449 Before Tax Costs After Tax Costs Weight WC Source of Capital Common Stock Preferred Stock Debt 12 13 14 15 16 17 18 19 20 21 25 27 23 29 31