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Suppose that TechInc consists of a perpetual cash flow of $15M USD that will arrive...

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Suppose that TechInc consists of a perpetual cash flow of $15M USD that will arrive next year. Assume the risk free rate is 2 percent. Apply the global CAPM to calculate the market value of Techinc if it were to cross-lists to gain access to global capital markets. TechInc E(R)%) Corr(Ri Ri Local 0.75 1.00 World 0.70 SD (%) 16 Techinc 1.00 2 0.85 13 Local Market World 10 8 1.00 12 $265.02 M $197.37 M $13.94 M M QUESTION 28 Suppose that TechInc consists of a perpetual cash flow of $15M USD that will arrive next year. Assume the risk free rate is 2 percent. Cross-listing requires that firms pay additional legal and accounting expenses on an annual basis. If the present value of the additional compliance expenses is $20M USD, given the table below should TechInc cross-list? Techinc 1.00 Corr(RR) Local 0.75 1.00 World 0.70 0.85 TechInc Local Market SD (%) 16 13 E(R)%) ? 10 World 1.00 12 8 Yes No Not enough information

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