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

3.60%,

the domestic beta is estimated at

1.11,

the international beta is estimated at

0.82,

and the company's capital structure is now

40%

debt. The before-tax cost of debt estimated by observing the current yield on Ganado's outstanding bonds combined with bank debt is

7.60%

and the company's effective tax rate is

38%.

Calculate both the CAPM and ICAPM weighted average costs of capital for the following equity risk premium estimates.

a. 8.50%

b. 7.40%

c. 5.20%

d. 4.30%

Question content area bottom

Part 1

a. Using the domestic CAPM, what is Ganado's weighted average cost of capital if the firm's equity risk premium is

8.50%? enter your response here% (Round to two decimal places.) and for b. 7.40% c. 5.20% d. 4.30%

ONE QUESTION!