1. A multinational company (MNC) located in Singapore namely Datrx is issuing bonds by yield of 8 percent while the risk-free rate in Singapore is 3 percent. Based on the estimation made by the financial manager of Datrx, the company's common stock has a beta of 1.2, and the return on the Singapore Stock Market index (STI) is expected to be 9 percent. The company's preferred stock has a price of RM12 with fixed dividends of RM2.4. Assume the tax bracket for the company is 35 percent and the company is targeting capital structure of 40 percent debt, 40 percent common equity and 20 preferred stock.

a) Calculate the cost of common stocks.

b) Calculate the cost of preferred stock.

c) Calculate the Weighted Average Cost of Capital (WACC).

2. Glythe-Davidoff Inc. (GDI) an international confectioner based in Geneva. The firm estimates its cost of common equity by using the capital asset pricing approach (CAPM). Analysts estimate that the firm's beta is 0.75, the risk-free rate is 5.25 percent, and return on the average stock in the market is 11 percent. The firm's marginal tax rate is 35 percent. Calculate the firm's cost of common equity.

3. If GDI has a foreign project with a beta of 1.15, the risk-free return is 10 percent, and the required return on the market is estimated at 18 percent. Compute cost of capital for the project.