Styrene Polymers, Inc., a U.S. medical plastics manufacturer, has the following debt components in its consolidated capital section.

Styrene’s finance staff estimates their cost of equity to be 20%. Current exchange rates are also listed below.

Income taxes are 30% around the world after allowing for credits. Calculate Styrene’s weighted average cost of capital. Are any assumptions implicit in your calculation?

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Component 25-year U.S. dollar bonds 5-year U.S. dollar euronotes Styrene Polymer's Capital Structure U.S. Dollar Pre-Tax Post-Tax Amount $10,000,000 Percent of Total Cost (%) Cost (%) Weighted Component Cost (%) % 6.000% % % 4,000,000 % 4.000% % % % 5.000% % % 2.000% % % 20.000% % 100% WACC = % 10-year euro bonds 20-year yen bonds Shareholders' equity 50,000,000 Total Assumption Value Tax rate 30.00% 10-year euro bonds (euros) 6,000,000 20-year yen bonds (yen) 750,000,000 Spot rate ($ = 1.00) = Spot rate ($ 1.00) = Spot rate ( $1.00) 1.2400 1.8600 109.00