Question 26 4 points Sive Answe Kashmiri is the largest and most successful specialty goods company based in Bangalore, India. It has not entered the North American marketplace yet, but is considering establishing both manufacturing and distribution facilities in the United States through a wholy owned subsidiary. It has approached two different investment banking advisors. Goldman Sachs and Bank of New York, for estimates of what its costs of capital would be several years into the future when it planned to list its American subsidiary on a US stock exchange. Using the following assumptions by the two different advisors, calculate the prospective costs of debt equity, and the WACC for Kashmin (U.S.): Assumptions Symbol Goldman Sachs Bank of New York Components of beta B Estimate of correlation between seunty and market 0.78 0.81 Estimate of standard deviation of Kashimin's returns 19.09 22.096 Estimate of standard deviation of markets retum om 17.0% 16.096 krf Risk-free rate of interest Estime of Kashmi's cost of debt in US market Estimate of market retum forward-looking Corporate tax rate Proportion of debt Proportion of equity km t DNV EN 3.59 6.996 11.0% 35.09 3996 6196 3.596 6.6% 10:49 35.096 53% According to Goldman Sachs. Kashmiri's cost of equity is (4 points) 10.049 10.36% 11.18% 12.06%