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Sorensen Systems Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50 ), the dividend is expected to grow at a constant rate of 5.50% a year, an the common stock currently sells for $50 a share. The before-tax cost of debt is 7.50%, and the tax rate is 40%. The target capital structure consists of 47% debt and the rest common equity. What is the company's WACC if all the equity used is from retained earnings? Your Answer: Answer Question 3 ( 2 points) 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 5.02%, the yield on the preferred is 8.12%, the cost of retained earnings is 16.96%, and the tax rate is 17%. The firm will not be issuing any new stock. What is Quigley's WACC? term debt with a coupon rate of 7.00% and a yield to maturity of 7.27%. This debt currently has a market value of $50 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 $55 million. The current stock price is $20 per share; stockholders' required return, rs, is 18.40%; and the firm's tax rate is 40%. The CFO thinks the WACC should be based on market value weights, but the idiot president thinks book weights are more appropriate. What is the difference between these two WACCs