Ferrari's IPO and WACC. Ferrari, the famous high-performance automotive group, launched its initial public offering (IPO) on October 20, 2015. Although the share price had initially risen to over 55 euros () per share, by the end of the year it had settled to 46 euros (). Ferrari had been owned by Fiat (Italy), and had never calculated its own cost of capital before, one independent of Fiat. It now needed to, and one of its first challenges was estimating its beta. With only two months of trading to base it on, the corporate treasury group had started with what were considered "comparable firms", which for Ferrari, meant firms in the luxury goods industry, not automotive. Luxury goods were historically less volatile than the market, so the initial guess on Ferrari's beta was 0.88. Use the assumptions in the popup table, , to answer the following questions. a. What is Ferrari's cost of debt, after-tax, in euros? b. What is Ferrari's cost of equity in euros? c. What is Ferrari's market capitalization? d. What is Ferrari's total value of equity outstanding? e. What proportion of Ferrari's capital structure is equity? f. What proportion of Ferrari's capital structure is debt? g. What is Ferrari's weighted average cost of capital? h. What is Ferrari's WACC if its beta was higher, like other automotive companies, say 1.34? Data table (Click on the icon to import the table into a spreadsheet.) a. What is Ferrari's cost of debt, after-tax, in euros? % (Round to two decimal places.) b. What is Ferrari's cost of equity in euros? (Round to two decimal places.) Component Italian risk-free cost of debt in euros () Ferrari's cost of debt in euros () Italian corporate income tax rate Ferrari's prospective beta Italian equity market risk premium (equity return over risk-free rate) Ferrari's shares outstanding Ferrari's share price in euros Ferrari's debt outstanding in euros Value 3.77% 3.76% 31% 0.88 5.30% 212,000,000 46 549,000,000 c. What is Ferrari's market capitalization? (Round to the nearest whole number.) d. What is Ferrari's total value of equity outstanding? (Round to the nearest whole number.) Print Done e. What proportion of Ferrari's capital structure is equity? % (Round to two decimal places.) f. What proportion of Ferrari's capital structure is debt? (Round to two decimal places.) g. What is Ferrari's weighted average cost of capital? % (Round to two decimal places.)