Mobi-SA (South Africa). Mobi-SA is a large mobile phone provider based in South Africa. It has not entered the Nigerian marketplace yet, but is considering establishing network and distribution facilities in Nigeria through a wholly owned subsidiary. It has approached two different investment banking advisors, Standard Chartered Bank of South Africa and First Bank of Nigeria, for estimates of what its costs of capital would be several years into the future when it planned to list its Nigerian subsidiary on the Nigerian stock exchange. Using the following assumptions by the two different advisors, calculate the prospective costs of debt, equity, and the WACC for Mobi-SA.

Using the following assumptions by the two different advisors, calculate the prospective costs of debt, equity, and the WACC for Mobi-SA:

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Standard Chartered First Assumptions Symbol Bank of South Africa Bank of Nigeria Estimate of 0.75 0.7 correlation between security and market Estimate of Pjm 20% 25% standard deviation of Mobi-SA's returns Estimate of j 15% 18% standard deviation of market's return Risk-free rate of Krf 10% 10% interest Estimate of Mobi- ka 15% 15% SA's cost of debt in Nigerian market Estimate of km 11% 12% market return. forward-looking Corporate tax t 30% 30% Proportion of debt DIV 40% 50% Proportion of EIV 60% 50% equity