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Ganado's Cost of Capital. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.40%, the company's credit risk premium is 4.50%, the

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Ganado's Cost of Capital. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.40%, the company's credit risk premium is 4.50%, the domestic beta is estimated at 0.94, the international beta is estimated at 0.68, and the company's capital structure is now 65% debt. The expected rate of return on the market portfolio held by a well-diversified domestic investor is 9.80% and the expected return on a larger globally integrated equity market portfolio is 8.70%. The before-tax cost of debt estimated by observing the current yield on Ganado's outstanding bonds combined with bank debt is 8.10% and the company's effective tax rate is 30%. For both the domestic CAPM and ICAPM, calculate the following: a. Ganado's cost of equity b. Ganado's after-tax cost of debt c. Ganado's weighted average cost of capital a. Using the domestic CAPM, what is Ganado's cost of equity? % (Round to two decimal places.) Using the ICAPM, what is Ganado's cost of equity? % (Round to two decimal places.) b. Using the domestic CAPM, what is Ganado's after-tax cost of debt? % (Round to two decimal places.) Using the ICAPM, what is Ganado's after-tax cost of debt? % (Round to two decimal places.) c. Using the domestic CAPM, what is Ganado's weighted average cost of capital? Enter your answer in each of the answer boxes

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