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kindly provide explanation to the answers Book value b. Eshun Ltd is currently financed as follows Security Cost Ordinary share on 12.5% Debentures 6% Market
kindly provide explanation to the answers
Book value b. Eshun Ltd is currently financed as follows Security Cost Ordinary share on 12.5% Debentures 6% Market value 300 120 60 50 Total 180 350 Eshun lid wishes to expand its business for which a further GH120m finance is required, the following options are being considered i. Option A: takes on GHS50m debt plus GHS70m equity ii. Option B: takes on GHS 70r: debt plus GHS50m equity It is expected thet the cost of the new debt will match that of the existing debt, however due to the increased financial risk, it is cstimated that the cost of equity will rise by 0.5% for option A and 2% for option B. You are required to compute the existing WACC and the new WACC under the two options. 12 marks uution FiveStep by Step Solution
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