Terry McDermott now estimates Aidans risk-free rate to be 3.60%, the companys credit risk premium is 4.40%,

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Terry McDermott now estimates Aidan’s 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 is estimated at 0.85, and the company’s capital structure is now 30% debt. All other values remain the same as those presented in this chapter in the section “Sample Calculation: Aidan’s Cost of Capital.” For both the domestic CAPM and ICAPM, calculate the following:

a. Aidan’s cost of equity

b. Aidan’s cost of debt

c. Aidan’s weighted average cost of capital

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Multinational Business Finance

ISBN: 9781292445960

16th Global Edition

Authors: David Eiteman, Arthur Stonehill, Michael Moffett

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