Question 15

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 12.00%, and the tax rate is 40%. The firm will not be issuing any new stock. What is Quigley's WACC?

		9.34%
		9.51%
		8.99%
		7.62%
		8.57%

5 points

Question 16

Fernando Designs is considering a project that has the following cash flow and WACC data. What is the project's discounted payback?

WACC:	10.00%
Year		0	1	2	3
Cash flows	-$900	$500	$500	$500	$500

		1.88 years
		2.09 years
		2.29 years
		2.52 years
		2.78 years