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Question Two Executive Fruit Ltd, a Ghanaian Company, has issued debt at 8% interest per annum, preferred stock and common stock. The market value of

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Question Two Executive Fruit Ltd, a Ghanaian Company, has issued debt at 8% interest per annum, preferred stock and common stock. The market value of these securities are 8 million, $4 million, and $12 million respectively. The beta for Executive Fruit's common stock is given as 1.15. The return on riskless assets is 12% whiles the expected return on the Ghana Stock Exchange Composite Index (GSE-CI), a proxy for market portfolio, is 32%. Executive Fruits Ltd pays $12.00 dividends on each of the outstanding 80,000 preferred stock and has a marginal tax rat of 35%. a. Determine the pretax cost of debt b. Determine the tax-adjusted cost of debt [2 marks] [4 marks] [4.5 marks c. Determine the cost of common stock d. Determine the cost of preferred stock (4.5 marks e. Determine the Weighted Average Cost of Capital (WACC) [5 marks]

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