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?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter14: Distributions To Shareholders: Dividends And Repurchases

Section: Chapter Questions

Problem 2STP

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