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QUESTION TWO (10 MARKS) The Adepa Company is interested in measuring its overall cost of capital. The following data relates to the finance of the
QUESTION TWO (10 MARKS) The Adepa Company is interested in measuring its overall cost of capital. The following data relates to the finance of the company: The company has bonds of GH1,000 par value, 10% coupon interest rate. The bond is redeemable in 10 years. The current market value is GH950 per bond ex interest. The company also has 1 million, GH100 par value of 10.5% preference shares outstanding and 5 million ordinary shares outstanding. The preference shares sell for GH56 per share. The ordinary shares have a beta of 1.2 and sells for GH38 a share. The Government Treasury bill is yielding 13% and the return on the market is 22%. The corporate tax rate is 40%. Required Calculate the cost for each source of capital
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