The most recent financial information of Janana Informa Communications Ltd is provided for the year 2020....

 

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The most recent financial information of Janana Informa Communications Ltd is provided for the year 2020. Jaana Informa Communications Ltd Balance Sheet As At 31" December 2020 GHC'000 GHC'000 46,850 Fixed Assets Current Assets 8,640 Current Liabilities Total Assets less Current Liabilities 1,440 7,200 54,050 8% Preference Shares (GHC1.00) 12% Debentures (Redeemable in January 2028) 10% Bank Loans 10,600 20,200 8,250 39,050 15,000 12,000 Ordinary Shares (GHCO.50) Reserves 3,000 15,000 Additional Information: i) ii) Yields on Treasury Bills Company Equity Beta 8% 1.50 Market Risk Premium iv) v) 5.4% GHC2.50 GHCO.60 Current ex-div. Ordinary share price Current ex-div. Preference share price Current ex-interest Debenture market value GHC105 Corporation Tax vi) vii) 25% Required: Calculate: a) Using Capital Assets Pricing Model (CAPM) the cost of Equity Capital b) Cost of Preference Share Capital c) Cost of Debt before Taxation d) Cost of Debt after Taxation e) Weighted Average Cost of Capital (WACC) (15 Marks) The most recent financial information of Janana Informa Communications Ltd is provided for the year 2020. Jaana Informa Communications Ltd Balance Sheet As At 31" December 2020 GHC'000 GHC'000 46,850 Fixed Assets Current Assets 8,640 Current Liabilities Total Assets less Current Liabilities 1,440 7,200 54,050 8% Preference Shares (GHC1.00) 12% Debentures (Redeemable in January 2028) 10% Bank Loans 10,600 20,200 8,250 39,050 15,000 12,000 Ordinary Shares (GHCO.50) Reserves 3,000 15,000 Additional Information: i) ii) Yields on Treasury Bills Company Equity Beta 8% 1.50 Market Risk Premium iv) v) 5.4% GHC2.50 GHCO.60 Current ex-div. Ordinary share price Current ex-div. Preference share price Current ex-interest Debenture market value GHC105 Corporation Tax vi) vii) 25% Required: Calculate: a) Using Capital Assets Pricing Model (CAPM) the cost of Equity Capital b) Cost of Preference Share Capital c) Cost of Debt before Taxation d) Cost of Debt after Taxation e) Weighted Average Cost of Capital (WACC) (15 Marks)

Answer rating: 100% (QA)

Solution a CAPM K e Risk freebetaMarket Risk Premium 8... View the full answer