?Ganado's Cost of Capital.??Maria? Gonzalez, Ganado's Chief Financial? Officer, estimates the? risk-free rate to be 3.90%?, the?...

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?Ganado's Cost of Capital.??Maria? Gonzalez, Ganado's ChiefFinancial? Officer, estimates the? risk-free rate to be 3.90%?,the? company's credit risk premium is 3.80?%, the domestic beta isestimated at 0.92?, the international beta is estimated at 0.61?,and the? company's capital structure is now 80?% debt. The expectedrate of return on the market portfolio held by a? well-diversifieddomestic investor is 9.00% and the expected return on a largerglobally integrated equity market portfolio is 8.20 %. The?before-tax cost of debt estimated by observing the current yieldon? Ganado's outstanding bonds combined with bank debt is 7.90?%and the?company's effective tax rate is42?%.
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

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We need to employ CAPM capital asset pricing model in this case CAPM helps us to find out cost of equity based on given market Cost of Equity Re Risk Free Rate Beta Risk Premium See Answer

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?Ganado's Cost of Capital.??Maria? Gonzalez, Ganado's ChiefFinancial? Officer, estimates the? risk-free rate to be 3.90%?,the? company's credit risk premium is 3.80?%, the domestic beta isestimated at 0.92?, the international beta is estimated at 0.61?,and the? company's capital structure is now 80?% debt. The expectedrate of return on the market portfolio held by a? well-diversifieddomestic investor is 9.00% and the expected return on a largerglobally integrated equity market portfolio is 8.20 %. The?before-tax cost of debt estimated by observing the current yieldon? Ganado's outstanding bonds combined with bank debt is 7.90?%and the?company's effective tax rate is42?%.For both the domestic CAPM and? ICAPM, calculate the?following:a.? Ganado's cost of equityb.? Ganado's after-tax cost of debtc.? Ganado's weighted average cost of capital