Weighted average cost of capital and cost of debt

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Reference no: EM13922045

A. Fuhs Pastries, Inc has 12% annual coupon bonds outstanding with 11 years remaining until maturity. The current price fo the bonds are $1,329. What is Fuhs' cost of debt?

B. Paccione Italian Grill, Inc. has 6 million shares of common stock outstanding that is currently trading at $66 per share. The firm recently paid a $4.50 dividened and dividends are expected to increase by 6 percent per year indefinitely. Paccione also has 750,000 preferred shares outstanding that pay a $4.50 annual dividend and have a current price of $80.00 per share. The firm also has 130,000 bonds outstanding that pay a 9% annual coupon and have 18 years remaining until maturity. The bonds currently sell for $725. Paccione is subject to a 30% marginal tax rate.

What is Paccione's Weighted Average Cost of Capital?

Reference no: EM13922045

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Weighted average cost of capital and cost of debt : Fuhs Pastries, Inc has 12% annual coupon bonds outstanding with 11 years remaining until maturity. The current price fo the bonds are $1,329. What is Fuhs' cost of debt? What is Paccione's Weighted Average Cost of Capital?

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