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3.3 Ganado's Cost of Capital. Maria Gonzalez now estimates Ganado's risk-free rate to be 3.60, the company's credit risk premium is 4.40, the domestic beta
3.3 Ganado's Cost of Capital. Maria Gonzalez now estimates Ganado'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: Ganado's Cost of Capital.\" For both the domestic CAPM and ICAPM, calculate the following: a. Ganado's cost of equity b. Ganado's cost of debt c. Ganado's weighted average cost of capital Maria Gonzalez, Ganado's chief financial officer, wants to calculate the company's weighted average cost of capital in both forms, the traditional CAPM and also ICAPM. Maria assumes the risk-free rate of interest \\( \\left(k_{r f}\ ight) \\) as \4, using the U.S. government 10-year Treasury bond rate. The expected rate of return of the market portfolio \\( \\left(k_{m}\ ight) \\) is assumed to be \9, the expected rate of return on the market portfolio held by a well-diversified domestic investor. Ganado's estimate of its own systematic risk-its beta-against the domestic portfolio is 1.2 . Ganado's cost of equity is then
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