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Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.00%, the domestic beta is estimated at 0.95, the international beta is estimated
Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.00%, the domestic beta is estimated at 0.95, the international beta is estimated at 0.72, and the company's capital structure is now 30% 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 8.10% and the company's effective tax rate is 36%. Using the ICAPM to calculate Ganado's cost of equity, what is Ganado global WACC? O A. 7.78% B. 7.51% C. 6.62% D. 6.18%
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