Ganado's Cost of Capital. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 4.00%, the company's credit risk premium is 4.10%, the domestic beta is estimated at 0.97, the international beta is estimated at 0.72, and the company's capital structure is now 55% debt. The expected rate of return on the market portfolio held by a well-diversified domestic investor is 9.20% and the expected return on a larger globally integrated equity market portfolio is 8.10%. The before-tax cost of debt estimated by observing the current yield on Ganado's outstanding bonds combined with bank debt is 8.20% and the company's effective tax rate is 35%. For both the domestic CAPM and ICAPM, calculate the following: a. Ganado's cost of equity b. Ganado's after-tax cost of debt c. Ganado's weighted average cost of capital 40593 2015 2-315

Ganado's Cost of Capital. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 4.00%, the company's credit risk premium is 4.10%, the domesticheta is estimated at 0.97 , the international beta is estimated at 0.72 , and the company's capital structure is now 55% debt. The expected rate of return on the market portfolio held by a well-diversified domestic investor is 9.20\% and the expected retum on a larger globally integrated equity market portfolio is 8.10%. The before-tax cost of debt estimated by observing the current yield on Ganado's outstanding bonds combined with bank debt is 8.20% and the company's effective tax rate is 35\%. For both the domestic CAPM and ICAPM, calculate the following: a. Ganado's cost of equity b. Ganado's after-tax cost of debt c. Ganado's weighted average cost of capital