Genedak-Hogan's WACC.

Genedak-Hogan (G-H) is an American conglomerate that is actively debating the impacts of international diversification of its operations on its capital structure and cost of capital. The firm is planning on reducing consolidated debt after diversification. Senior management at Genedak-Hogan is actively debating the implications of diversification on its cost of equity. All agree that the company's returns will be less correlated with the reference market return in the future, the financial advisors believe that the market will assess an additional 3.4% risk premium for "going international" to the basic CAPM cost of equity. Calculate the weighted average cost of capital for Genedak-Hogan before and after international diversification.

Assumptions	Before Diversification	After Diversification
Correlation between G-H and the market	0.95	0.71
Standard deviation of G-H's returns	28.1%	25.4%
Standard deviation of market's returns	17.9%	17.9%
Risk-free rate of interest	4.0%	4.0%
Additional equity risk premium for internationalization	0.0%	3.4%
Estimate of G-H's cost of debt in U.S. market	7.5%	6.9%
Market risk premium	5.4%	5.4%
Corporate tax rate	42%	42%
Proportion of debt	33%	27%
Proportion of equity	67%	73%

1. Without the hypothetical additional risk premium, what is Genedak-Hogan's cost of equity before international diversification of its operations?
2. Without the hypothetical additional risk premium, what is Genedak-Hogan's cost of equity after international diversification of its operations?
3. Without the hypothetical additional risk premium, what is Genedak-Hogan's WACC before international diversification of its operations?
4. Without the hypothetical additional risk premium, what is Genedak-Hogan's WACC after international diversification of its operations?
5. With the hypothetical additional risk premium, what is Genedak-Hogan's cost of equity before international diversification of its operations?
6. With the hypothetical additional risk premium, what is Genedak-Hogan's cost of equity after international diversification of its operations?
7. With the hypothetical additional risk premium, what is Genedak-Hogan's WACC before international diversification of its operations?
8. With the hypothetical additional risk premium, what is Genedak-Hogan's WACC after international diversification of its operations?