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Ganad and equity risk premiums

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Reference no: EM132147305

Ganad and Equity Risk Premiums. Maria? Gonzalez, Ganado's Chief Financial? Officer, estimates the? risk-free rate to be 3.70 %, the? company's credit risk premium is 4.00%, the domestic beta is estimated at 0.93?, the international beta is estimated at 0.61?, and the? company's capital structure is now 50% debt. The? before-tax cost of debt estimated by observing the current yield on? Ganado's outstanding bonds combined with bank debt is 8.30?% and the? company's effective tax rate is 35%. Calculate both the CAPM and ICAPM weighted average costs of capital for the following equity risk premium estimates.

a. 8.70

b. 7.70

c. 5.70

d. 4.60

Using the domestic? CAPM, what is? Ganado's weighted average cost of capital if the? firm's equity risk premium is 8.70 %?

Using the? ICAPM, what is? Ganado's weighted average cost of capital if the? firm's equity risk premium is 8.70?

Using the domestic? CAPM, what is? Ganado's weighted average cost of capital if the? firm's equity risk premium is 7.70?

Using the? ICAPM, what is? Ganado's weighted average cost of capital if the? firm's equity risk premium is 7.70?

Using the domestic? CAPM, what is? Ganado's weighted average cost of capital if the? firm's equity risk premium is 5.70?

Using the? ICAPM, what is? Ganado's weighted average cost of capital if the? firm's equity risk premium is 5.70?

Using the domestic? CAPM, what is? Ganado's weighted average cost of capital if the? firm's equity risk premium is 4.60?

Using the? ICAPM, what is? Ganado's weighted average cost of capital if the? firm's equity risk premium is 4.60?

Reference no: EM132147305

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