What is the company wacc

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Reference no: EM132482422

Problem 1: Quinlan Enterprises stock trades for $52.50 per share. It is expected to pay a $2.50 dividend at year end (D 1 = $2.50), and the dividend is expected to grow at a constant rate of 5.50% a year. The before-tax cost of debt is 7.50%, and the tax rate is 25%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC if all the equity used is from reinvested earnings?

a. 7.53%

b. 8.84%

c. 7.85%

d. 8.18%

e. 8.50%

Reference no: EM132482422

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