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Ganado and Equity Risk Premiums. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.50%, the company's credit risk premium is 3.60%,
Ganado and Equity Risk Premiums. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.50%, the company's credit risk premium is 3.60%, the domestic beta is estimated at 0.92 , the international beta is estimated at 0.67 , and the company's capital structure is now 25% debt. The before cost of debt estimated by observing the current yield on Ganado's outstanding bonds combined with bank debt is 8.10% and the company's effective tax rate is 39%. Calculate poth the CAPM and ICAPM weighted average costs of capital for the following equity risk premium estimates. a. 8.20% b. 7.20% c. 5.00% d. 3.90% a. Using the domestic CAPM, what is Ganado's weighted average cost of capital if the firm's equity risk premium is 8.20% ? \% (Round to two decimal places.)
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