Ganado and Equity Risk Premiums. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be

3.90 %3.90%,

the company's credit risk premium is

4.504.50%,

the domestic beta is estimated at

1.181.18,

the international beta is estimated at

0.970.97,

and the company's capital structure is now

2525%

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

8.108.10%

and the company's effective tax rate is

3939%.

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

8.708.70%

b.

7.807.80%

c.

5.805.80%

d.

4.804.80%

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

8.70 %8.70%?