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Ganado and Equity Risk Premiums. Maria Gonzaloz, Ganado's Chiof Financial Officer, estmales the risk tree rate to be 3.90%, the company's credt risk premium is

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Ganado and Equity Risk Premiums. Maria Gonzaloz, Ganado's Chiof Financial Officer, estmales the risk tree rate to be 3.90%, the company's credt risk premium is 4.40%, the domestic beta is estimated at 1.07, the international beta is estimated at 0.84, and the company's captal structure is now 40% debt. The before-tax cost of debt estimated by observing the curtent yield on Ganado's outstanding bonds combined with bank debt is 8.30% and the company's effective tax rate is 42%. Cakculate boeh the CAPM and ICAPM weighted average costs of capital for the following equity risk premium estimates a. 8.50% b. 7.50% c. 5.50% d. 4.40% a. Using the domestic CAPM, what is Gsnado's weighted averege cost of captal if the firm's equly risk premium k. 5 soss? (Round to two decimal places)

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