A company in Thailand has a beta of 1.2 and a lambda of 0.7. The U.S. risk-free rate is 2.1%, the inflation rate is 6.2%, the equity risk premium is 5.33%. Thailand has a country risk premium of 4.58% and an inflation rate of 8.0%. What's the firm's cost of equity in U.S. dollars? Between 5% and 7% Between 7% and 9% Between 9% and 11% Above 11% QUESTION 2 Aspic Inc. is a US-based company that operates in two countries: the United States and Mexico. The total equity risk premium is 5% for the United States and 9% for Mexico. Which of the following estimates of the equity risk premium would you use for Aspic? 5% : the US equity risk premium, because it is US-based. 7%, a simple average of the US and Mexico equity risk premiums. 6.2%, the weighted average based upon the revenues that the company gets from the two countries ( 70% from the US, 30% from Mexico). 5.8%, the weighted average based upon the assets that the company has in the two countries ( 80% in the US, 20% in Mexico). 6.6%; the weighted average based upon the value that the company attaches to its operations in the countries ( 60% the US, 40% Mexico). QUESTION 3 Faraday Enterprises is a publicly traded company. It currently has 10 million shares trading at $12/ share and $150 million in book value of equity. The firm also has a book value of debt of $75 million and a market value of debt of $80 million. The cost of equity for the company is 9%, the pre-tax cost of debt is 4% and the marginal tax rate is 40%. What is the cost of capital? 7.4% 7.0% 7.7% 6.36% None of the above