2. (10 points) Travelport Worldwide Limited is a U.S. firm that conducts major importing and exporting business in the U.K., whereby all transactions are invoiced in dollars. in the United States at an interest rate of 5 percent per year. United States is 3 percent. The stock market stock market rate of return are respectively expected to be 9 percent and Travelport's beta against the U.S. stock market and the beta against the and 0.5, respectively. Its target capital structure is 50 percent Travelport Worldwide Limited is subject to a 20 percent corporate tax rate. It obtained debt The long-term risk-free rate in the rate of return in the United States and the world 3 percent annually. world market are 1.5 debt and 50 percent equity. 1 (a) (6 points) Suppose that the U.S. stock market is lsolated from the world Estimate the cost of capital to Travelport Worldwide Limited using a domestic (b) (s pointe) Now instead assume that the U.S. stock market is integrated to the world stock market. Estimate the cost of capital to Travelport Worldwide CAPM Limited using an international 6