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Ganado and Equity Risk Premiums. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.80%, the company's credit risk premium is 3.70%,

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Ganado and Equity Risk Premiums. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.80%, the company's credit risk premium is 3.70%, the domestic beta is estimated at 0.93 , the international beta is estimated at 0.73 , and the company's capital structure is now 30% debt. The before-tax cost of debt estimated by observing the current yield on Ganado's outstanding bonds combined with bank debt is 7.80% and the company's effective tax rate is 39%. Calculate both the CAPM and ICAPM weighted average costs of capital for the following equity risk premium estimates. a. 7.90% b. 6.80% c. 4.80% d. 3.70% a. Using the domestic CAPM, what is Ganado's weighted average cost of capital if the firm's equity risk premium is 7.90% ? % (Round to two decimal places.)

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