Tanket is a firm operating in India. It currently does not have any North American operations. It is considering establishing a manufacturing and logistic facilities in the US via a wholly owned subsidiary. Two different investment banks have been hired in order to estimate the expected cost of capital of the subsidiary when it is listed on a US exchange in the future. Bank of America has the following estimates:

Estiamte of Correlation between security and market: 0.84

Estimate of standard deviation firm's returns: 29%

Estimate of standard deviation of market's returns: 20%

Risk-free rate: 3.45%

Estimate of firm's cost of debt in the US market: 6.7%

Expected future return of market: 12.66%

Tax Rate: 32%

Proportion of Equity 63%