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Assume that you are trying to estimate the cost of equity for an average risk (beta =1) Mexican company in US dollars. The US treasury
Assume that you are trying to estimate the cost of equity for an average risk (beta =1) Mexican company in US dollars. The US treasury bond rate is 2.2% and the company gets 60% of its revenues in the United States and 40% from Mexico. The equity risk premium for Mexico is 7.5% and the equity risk premium for the US is 5.5%.
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To calculate the companys US dollar cost of equity we need to consider the riskfree rate the equity ...
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Financial Management Theory and Practice
Authors: Eugene F. Brigham, Michael C. Ehrhardt
15th edition
130563229X, 978-1305632301, 1305632303, 978-0357685877, 978-1305886902, 1305886909, 978-1305632295
