Gbewaa Ghana Ltd has issued 10 million shares with a market value of GHd5 per share. The equity
beta of the company is 1.2. The current yield of short-term government debt is 14% per annum,
and the equity risk premium is approximately 5% per annum. The debt finance of Gbewaa Ghana
Ltd consists of bonds with a book value of GHe10,000,000. These bonds pay interest at 18% per
annum, and market value of each bond is 110%. The company's tax rate is 25%. The company also
has 50,000 preferred stocks with a market price of GH¿20.00 per share and paid dividend of
GH$10.00 last year.
Required; Calculate Gbewaa Ghana Ltd,'s Cost of Capital.