Market conditions have changed. Maria Gonzalez now estimates the risk-free rate to be 3.60%, the company's credit

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Market conditions have changed. Maria Gonzalez now estimates the risk-free rate to be 3.60%, the company's credit risk premium is 4.40%, the domestic beta is estimated at 1.05, the international beta at .85, and the company's capital structure is now 30% debt. All other values remain the same. For both the domestic CAPM and ICAPM, calculate:

a. Ganado's cost of equity

b. Ganado's cost of debt

c. Ganado's weighted average cost of capital

Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...
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Multinational Business Finance

ISBN: 978-0133879872

14th edition

Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett

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