Adonai Estates Limited, established 10 years ago, is a listed medium size real estate development company in Ghana, its capital structure is made up of the following components. • 10,000 bomds face value of Ghs1,000. • 2 million shares of 7% preference stocks with face value Ghs100 and • 5 million shares of common stocks. Yield to maturity of bonds with similar characteristics is 7%. The preference shares are selling for Ghs60 a share. The common stock has a beta of 1.5 and sells Ghs50 a share. Risk free rate is 3% and market return is 15%. Tax rate is 16.5%. Required: What is Adonai Estate Limited weighted average cost of capital?
Adonai Estates Limited, established 10 years ago, is a listed medium size real estate development company in Ghana, its capital structure is made up of the following components. • 10,000 bomds face value of Ghs1,000. • 2 million shares of 7% preference stocks with face value Ghs100 and • 5 million shares of common stocks. Yield to maturity of bonds with similar characteristics is 7%. The preference shares are selling for Ghs60 a share. The common stock has a beta of 1.5 and sells Ghs50 a share. Risk free rate is 3% and market return is 15%. Tax rate is 16.5%. Required: What is Adonai Estate Limited weighted average cost of capital?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Adonai Estates Limited, established 10 years ago, is a listed medium size real estate development
company in Ghana, its capital structure is made up of the following components.
• 10,000 bomds face value of Ghs1,000.
• 2 million shares of 7% preference stocks with face value Ghs100 and
• 5 million shares of common stocks.
Yield to maturity of bonds with similar characteristics is 7%.
The
Risk free rate is 3% and market return is 15%.
Tax rate is 16.5%.
Required:
What is Adonai Estate Limited weighted average cost of capital?
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