Firm weighted average cost of capital

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1) List and explain the two dominant factors as to why there are country differences in the cost of debt. For example, why is the cost of debt different in Brazil than Japan? (If a Brazilian subsidiary was to borrow money locally, they would pay a different interest rate than if a Japanese subsidiary was to borrow money locally.)

2) An MNC has total assets of $100 million and debt of $20 million. The firm's before-tax cost of debt is 12 percent, and its cost of financing with equity is 15 percent. The MNC has a corporate tax rate of 40 percent. What is this firm's weighted average cost of capital?

Reference no: EM132564827

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