Niklas is asked to estimate the cost of equity capital for Ariston holdings, a listed firm in Zimbabwe that sells agricultural products. Zimbabwe is a country in Africa, which has an average inflation rate of 150% in the past three years. Niklas made the following estimations:
1. The risk-free rate is the ten-year Zimbabwean Government bond rate.
2. The market risk premium is the ten-year historical difference between the average returns on ZSE All Share Index, a market index consisting of 63 listed firms in Zimbabwe, and the ten-year Zimbabwean Government bond rate.
3. The beta for Ariston is the average beta of other global firms that sell similar agricultural products.

Requirements:
a. What are the potential errors in Niklas' estimation of Ariston's cost of equity capital?

b. What advice would you give Niklas to fix these errors?