PLEASE ANSWER THIS QUESTION

Estimate the value of Nextel Peru. How does it compare to the price Entel is offering? How much confidence do you have in your answer? Explain why you are or are not confident.

4. ( 2 points) Assume that the yield on 1-month Treasury Bills is 3.08%. What is the cost of equity of Nextel (NII Holdings) assuming investors are (i) diversified in the US, (ii) globally diversified and (iii) diversified in Latin America? Use the methods covered in class to compute the cost of equity. (i) Cost of Equity of Nextel if investors are diversified in the U.S =0.0308+0.65 (0.05)=0.0633 (ii) Cost of Equity of Nextel if investors are globally diversified =0.0308+0.77 (0.05)=0.0693 (iii) Cost of Equity of Nextel if investors are diversified in Latin America =0.0308+ 0.67(0.07)=0.0777 5. (2 points) How does the cost of equity of NII Holdings compare to two of its competitors America Movil and Telefonica de Peru? Assume investors are globally diversified. Discuss. American Movil Ke=0.0308+1.01(0.05)=0.813 or 8.13% Telefonica de Peru Kc=0.0308+0.35(0.05)=0.0483or4.83% 4. ( 2 points) Assume that the yield on 1-month Treasury Bills is 3.08%. What is the cost of equity of Nextel (NII Holdings) assuming investors are (i) diversified in the US, (ii) globally diversified and (iii) diversified in Latin America? Use the methods covered in class to compute the cost of equity. (i) Cost of Equity of Nextel if investors are diversified in the U.S =0.0308+0.65 (0.05)=0.0633 (ii) Cost of Equity of Nextel if investors are globally diversified =0.0308+0.77 (0.05)=0.0693 (iii) Cost of Equity of Nextel if investors are diversified in Latin America =0.0308+ 0.67(0.07)=0.0777 5. (2 points) How does the cost of equity of NII Holdings compare to two of its competitors America Movil and Telefonica de Peru? Assume investors are globally diversified. Discuss. American Movil Ke=0.0308+1.01(0.05)=0.813 or 8.13% Telefonica de Peru Kc=0.0308+0.35(0.05)=0.0483or4.83%