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You have been given the task of estimating the cost of capizal for Valdez Inc., a Colombia - based company that operates in two businesses

You have been given the task of estimating the cost of capizal for Valdez Inc., a Colombia-based company that operates in two businesses - food processing and grocery retail- and in two countries - the United States and Colombia. The estimated values of the businesses is broken down in the table below (with the values in millions of US dollars):
\table[[,Colombia,USA,\table[[Unlevered Beta for],[business]]],[Food processing (value of business),1,000,0,0.90],[Groceries (value of business),500,1,000,0.60],[Government bond rate (in US $),7.37%,3.52%,],[Government bond rate (in Pesos),12.75%,NA,],[Marginal tax rate,25%,28%,]]
The company has $500 million in debt, all in its US operations, with a synthetic rating of BBB and a company default spread of 2%.
(a) What is the value of the firm?
(b) Estimate the unlevered beta.
(c) Estimate the (levered) beta that you would use for Valdez Inc.
(d) Calculate the Colombian default spread.
(e) Calculate the risk free in USA.
(f) Estimate the cost of equity in US dollars.
(g) Estimate the after-tax cost of debt in US dollars.
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