Q6: GE, which is one of the most diversified large corporations in the U.S, has a beta of 1.10 and a debt ratio of 30%; it's after tax cost of debt is 4%. It is considering creating a large subsidiary in Latin America, manufacturing and selling appliances. The beta of other firms in the appliance business is 0.80, the debt ratio of these firms is 20%, and the typical after-tax cost of debt is 5.5%. If the riskless rate is 6% and the risk premium is 5.5%, estimate the cost of capital for the subsidiary. Q6: GE, which is one of the most diversified large corporations in the U.S, has a beta of 1.10 and a debt ratio of 30%; it's after tax cost of debt is 4%. It is considering creating a large subsidiary in Latin America, manufacturing and selling appliances. The beta of other firms in the appliance business is 0.80, the debt ratio of these firms is 20%, and the typical after-tax cost of debt is 5.5%. If the riskless rate is 6% and the risk premium is 5.5%, estimate the cost of capital for the subsidiary