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To help finance a major expansion, Castro Chemical Company sold a noncallable bond several years ago that now has 20 years to maturity. This bond has a 10.00% annual coupon, paid semiannually, sells at a price of $750, and has a par value of $1,000. If the firm's tax rate is 25%, what is the component cost of debt for use in the WACC calculation? Do not round your intermediate calculations. a. 13.68% b. 5.29% c. 11.16% d. 10.26% e. 6.84% You were hired as a consultant to Quigley Company, whose target capital structure is 20% debt, 10% preferred, and 70% common equity. The interest rate on new debt is 7.00%, the yield on the preferred is 6.00%, the cost of retained earnings is 13.25%, and the tax rate is 25%. 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. 8.46% b. 11.28% c. 10.93% d. 8.17% e. 10.33% Sapp Trucking's balance sheet shows a total of noncallable \$35 million long-term debt with a coupon rate of 7.00% and a yield to maturity of 6.00%. This debt currently has a market value of $45 million. The balance sheet also shows that the company has 10 million shares of common stock, and the book value of the common equity (common stock plus retained earnings) is $70 million. The current stock price is $18.00 per share; stockholders' required return, rS, is 14.00%; and the firm's tax rate is 25%. The CFO thinks the WACC should be based on market value weights, but the president thinks book weights are more appropriate. What is the difference between these two WACCs? a. 1.07% b. 0.80% c. 0.93% d. 1.27% e. 0.60% Assume that you have been hired as a consultant by CGT, a major The stock is currently selling for $10.65 per share, and its noncallaple \$1,000.00 par value, 10-year, 13.00% bonds with semiannual payments are selling for $942.13. The beta is 1.10, the yield on a 6-month Treasury bill is 3.50%, and the yield on a 10-year Treasury bond is 5.50%. The required return on the stock market is 11.00%, but the market has had an average annual return of 14.00% during the past 5 years. The firm's tax rate is 25%. What is the best estimate of the firm's WACC? Do not round your intermediate calculations. a. 13.01% b. 12.22% c. 11.29% d. 10.99% e. 10.08%