Question 3

Assume a risk-free rate of interest of 4%, an expected rate of return on the market portfolio of 9% and a beta of 1.2 then the traditional domestic CAPM results in a cost of equity of:

Note: answer is a percentage, enter only the number

Question 4

Assume a before tax cost of debt of 8% and a tax rate of 35% then the after tax cost of debt is:

Note: answer is a percentage, enter only the number

Question 5

Based on the previous two calculations of cost of equity and cost of debt and a capital structure of 60% equity and 40% debt, the companys WACC is:

Note: answer is a percentage, enter only the number

Question 6

Now assume a risk-free rate of interest of 4%, an expected rate of return on the global market portfolio of 8% and a global beta of 0.90 then the ICAPM results in a cost of equity of:

Note: answer is a percentage, enter only the number

Question 7

Based on the previous calculation of cost of debt and the revised calculation of cost of equity and a capital structure of 60% equity and 40% debt, the companys revised WACC is:

Note: answer is a percentage, enter only the number