Business Revenues (in $ millions) Enterprise Value/Sales Unlevered Beta

Computer hardware $900 0.7 1.1

Computer services $700 2.1 0.9

The company also provides the breakdown of revenues geographically:

Country Riskfree rate In local currency Equity Risk Premium Marginal tax rate Total Revenues (in $ mil) United States 4.00% 5.00% 39.00% $800

China 5.00% 7.00% 24.00% $800

Now assume that Booyah wants to sell just its hardware business in the United States at fair value (based on the EV/Sales ratio for the sector) in the United States, borrow an additional $315 million in the US and invest the total amount in computer services in China. Estimate the cost of equity in US $ for Booyah after the transaction. (3 points)