You want to estimate the country risk premium (over and above the base equity premium) to charge for a company listed in Indonesia, and have been supplied with the following information: O Indonesia is rated BB by S&P, and the corporate bond spread over the treasury bond rate for BB rated bonds is 3.0%. O The standard deviation in Indonesian equity prices over the last year has been 84%, while the standard deviation in Indonesian government bond prices has been 21%. a. Estimate the country risk premium for Indonesia. b. You are now trying to estimate the cost of equity, in nominal Rupiah, for an Indonesian paper and pulp firm. The firm has a beta of 0.75. In addition, it derives 80% of its revenues in US dollars, whereas the average Indonesian firm derives only 20% of its revenues in US dollars. Estimate the cost of equity for this firm, if the Indonesian Rupiah riskfree rate is 15%, and the risk premium for mature equity markets is 5.5%.