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with deatiled explaniation for c and b please Foodco Company has reported the following financial data on its recent financial report. The company is planning

with deatiled explaniation for c and b please image text in transcribed
Foodco Company has reported the following financial data on its recent financial report. The company is planning to restructure its capital structure by increasing its debt from 30% to 40% of the total capital of the company. The proposed capital structure is composed of 40% debt and 60% equity. The company is planning to issue a 1000 face-value, 15-year bond outstanding with a 7% annual coupon rate that is currently trading at its par value. The new debt issue will increase the before tax cost of debt to 8%. The company applies a marginal tax rate of 30%. In addition, the report shows that the risk free rate is 5%, the market risk premium is 6% and its common stock has a beta of 1.4. Required? (a) Compute the weighted average cost of capital of the company? (b) Suppose that the weighted average cost of capital for the company was 9.5%. Discuss whether the company should proceed with the restructuring of its capital structure? (c) The company is planning to use the new debt to finance a new capital project with an IRR of 10%. Discuss whether the company should proceed with the new project

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