Read the illustration below and compute for the cost of capital. And briefly explain cost of capital further.

1. Assume newly formed Gold Company needs to raise $1.5 million in capital so it can buy an office and the necessary equipment to run its business. The company raises the first $800,000 by selling stocks. Shareholders demand a 5% return on their investment, so the cost of equity is 5%. Gold Company then sells 700 bonds for $1,000 each to raise the rest of the $700,000 in capital. The individuals who purchase those bonds expect a 10% return, so Gold's cost of debt is 10%. Gold Company's total market value is calculated as ($800,000 equity + $700,000 debt) = $1.5 million, and its corporate tax rate is 25%. Compute for the cost of capital.

Kindly provide your answer based on the given questions.

1. What are the implications of capital structure in a multinational corporation?

2. Why Debt and Equity are considered in the capital structuring?