Nestl of Switzerland Revisited. Nestl of Switzerland is revisiting its cost of equity analysis in 2014. As a result of extraordinary actions by the Swiss Central Bank, the Swiss bond index yield (10-year maturity) has dropped to a record low of 0.46%. The Swiss equity markets have been averaging 8.80% returns, while the Financial Times global equity market returns, indexed back to Swiss francs, is at 9.17%. Nestl's corporate treasury staff has estimated the company's domestic beta at 0.931, but its global beta (against the larger global equity market portfolio) at 0.524.

Please answer the following questions: (Round to two decimal places.)

a. What is Nestl's cost of equity based on the domestic portfolio for a Swiss investor?

b. What is Nestl's cost of equity based on a global portfolio for a Swiss investor?