1. Vogl Co. is a U.S. firm that conducts major importing and exporting business in Japan, whereby all transactions are invoiced in dollars. It obtained debt in the United States at an average interest rate of 10 percent per year (pre-tax cost of debt = 10%). Currently, T-bill rates are 3 percent. The U.S. stock market return and the world stock market return are expected to be 14 percent and 16 percent, respectively. Vogl's beta against the U.S. stock market and the beta against the world market are 1.2 and 0.8, respectively. The firm's target capital structure is 30 percent debt and 70 percent equity. Vogl Co. is subject to a 25 percent corporate tax rate. a. What is the weighted average cost of capital to Vogl Co, assuming that the U.S. stock market is segmented? b. What is the weighted average cost of capital to Vogl Co, assuming that the U.S. stock market is fully integrated? (Hint: estimate the cost of equity using the CAPM)