Gbewaa Ghana Ltd has issued 10 million shares with a market value of GHd5 per share. The equity beta of the company is 1

Business, Finance, Economics, Accounting, Operations Management, Computer Science, Electrical Engineering, Mechanical Engineering, Civil Engineering, Chemical Engineering, Algebra, Precalculus, Statistics and Probabilty, Advanced Math, Physics, Chemistry, Biology, Nursing, Psychology, Certifications, Tests, Prep, and more.
Post Reply
answerhappygod
Site Admin
Posts: 899603
Joined: Mon Aug 02, 2021 8:13 am

Gbewaa Ghana Ltd has issued 10 million shares with a market value of GHd5 per share. The equity beta of the company is 1

Post by answerhappygod »

Gbewaa Ghana Ltd has issued 10 million shares with a market
value of GHd5 per share. The equity
beta of the company is 1.2. The current yield of short-term
government debt is 14% per annum,
and the equity risk premium is approximately 5% per annum. The debt
finance of Gbewaa Ghana
Ltd consists of bonds with a book value of GHe10,000,000. These
bonds pay interest at 18% per
annum, and market value of each bond is 110%. The company's tax
rate is 25%. The company also
has 50,000 preferred stocks with a market price of GH¿20.00 per
share and paid dividend of
GH$10.00 last year.
Required; Calculate Gbewaa Ghana Ltd,'s Cost of Capital.
Join a community of subject matter experts. Register for FREE to view solutions, replies, and use search function. Request answer by replying!
Post Reply