In his report, Sandell would like to discuss the sensitivity of the projects net present value to the estimation of the cost of equity. Which are the China projects net present values calculated using the equity beta without and with the country risk premium?

Jurgen Knudsen has been hired to provide industry expertise to Henrik Sandell, CFA, an analyst for a pension plan managing a global large-cap fund internally. Sandell is concerned about one of the fund's larger holdings, auto parts manufacturer Kruspa AB. Kruspa currently operates in 80 countries, with the previous year's global revenues at 5.6 billion. Recently, Kruspa's CFO announced plans for expansion into China. Sandell worries that this expansion will change the Additional information: 4.82% 4.25% 0.3 900 million 2.4 billion Equity risk premium, Sweden Risk-free rate of interest, Sweden Industry debt-to-equity ratio Market value of Kruspa's debt Market value of Kruspa's equity Kruspa's equity beta Kruspa's before-tax cost of debt China credit A2 country risk premium Corporate tax rate Interest payments each company's risk profile and wonders if he should recommend a sale of the position. Sandell provides Knudsen with the basic information. Kruspa's global annual free cash flow to the firm is 500 million and earnings are 400 million. Sandell estimates that tt Kruas atter- tax free cash flow to the firm on the China project for next three years is, respectively, 48 million, 52 million, and 54.4 million. Kruspa recently announced a dividend of 4.00 per ts that Knudsen ignore possible currency the Chinese plant to sell only to customers within China for the first Knudsen is asked to evaluate Kruspa's planned financing of the required 100 million with a 80 public offering of 10-year debt in Sweden and the remainder with an cash flow will level off f at a 2 percent rate of growth. Sandell also estimates 2 9.25% I .8896 375% Level share of stock. For the initial analysis, Sandell reques uctuations. FHe expects three years. ycar equity offering