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Ganado's Cost of Capital. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.20%, the company's credit risk premium is 3.70%, the

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Ganado's Cost of Capital. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.20%, the company's credit risk premium is 3.70%, the domestic beta is estimated at 1.07 the international beta is estimated at 0.83, and the company's capital structure is now 35% 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 8.00%. The before-tax cost of debt estimated by observing the current yield on Ganado's outstanding bonds combined with bank debt is 7.70% and the company's effective tax rate is 38%. For both the domestic CAPM and ICAPM, calculate the following: a. Using the domestic CAPM, what is Ganado's cost of equity? 9.15 % (Round to two decimal places.) Using the ICAPM, what is Ganado's cost of equity? 7.23 % (Round to two decimal places.) b. Using the domestic CAPM. what is Ganado's after-tax cost of debt? 5.33 % (Round to two decimal places.) Using the ICAPM, what is Ganado's after-tax cost of debt? 5.33 % (Round to two decimal places.) c. Using the domestic CAPM, what is Ganado's weighted average cost of capital? 7.43% (Round to two decimal places.) Using the ICAPM, what is Ganado's weighted average cost of capital? % (Round to two decimal places.)

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