Sunrise Manufacturing, Inc. Sunrise Manufacturing, Inc., a U.S. multinational company, has the following debt components in its consolidated capital section.

Sunrise’s finance staff estimates their cost of equity to be 20%. Current exchange rates are also listed in the following table. Income taxes are 30%

around the world after allowing for credits. Calculate Sunrise’s weighted average cost of capital. Are any assumptions implicit in your calculation?

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Component 25 year US dollar bonds 5 year US dollar euronotes 10 year euro bonds Sunrise Manufacturing, Inc. US Dollar Amount $ 10,000,000 Percent of Total Pre-tax Cost (%) Post-tax Cost (%) Weighted Component Cost (%) % 6.000% 70 % 4,000,000 % 4.000% % % 5.000% % 0% 10 20 year Yen bonds Shareholders' equity 50,000,000 Total Assumption Value % 2.000% % % 70 % 20.000% % 10 100% WACC = % Tax rate 10-year euro bonds (euros) 20-year yen bonds (yen) Spot rate ($/euro) Spot rate ($/pound) Spot rate (yen/$) 30.00% 6,000,000 750,000,000 1.2400 1.8600 109.00