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

3.40%,

the company's credit risk premium is

3.70%

the domestic beta is estimated at

0.99

the international beta is estimated at

0.76

and the company's capital structure is now

55%

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.

8.40%

b.

7.50%

c.

5.30%

d.

4.40%

the domestic beta is estimated at

0.990.99,

the international beta is estimated at

0.760.76,

and the company's capital structure is now

5555%

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

7.807.80%

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.

8.408.40%

b.

7.507.50%

c.

5.305.30%

d.

4.404.40%