1. Zegala Inc. is an all-equity funded company that operates in two businesses and derives all of its revenues in the United States. Estimated Value (in $ millions) Unlevered Beta Hotels $500.00 0.90 Travel Services $1,000.00 1.20 Company $1,500.00 1.10 > The firm is considering borrowing $1.5 billion and expanding its hotel business into Mexico. The US 10-year T.bond rate is 3%, the Mexican government 10-year peso rate is 8%k the equity risk premium for the US is 5% and the equity risk premium for Mexico is 7.5%. Estimate the cost of equity in US $ terms for the company, after the expansion. (The marginal tax rate is 25%) (4 points)