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Ganado and Equity Risk Premiums. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.90%, the company's credit risk premium is 4.00%,
Ganado and Equity Risk Premiums. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.90%, the company's credit risk premium is 4.00%, the domestic beta is estimated at 1.12, the international beta is estimated at 0.91, and the company's capital structure is now 65% debt. The before-tax cost of debt estimated by observing the current yield on Ganado's outstanding bonds combined with bank debt is 8.60% and the company's effective tax rate is 42%. Calculate both the CAPM and ICAPM weighted average costs of capital for the following equity risk premium estimates. escomputer. The before-tax cost of a. 8.30% b. 7.20% c. 5.40% d. 4.50% a. Using the domestic CAPM, what is Ganado's weighted average cost of capital if the firm's equity risk premium is 8.30%? | % (Round to two decimal places.)
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