What is rewards cost of dollar-denominated equity

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Reference no: EM132020447

Let's assume the following information for Rewards Inc., a Canada-based multinational company that is considering obtaining funding for a project in Australia:

Canada risk-free rate = 4%

Australia risk-free rate = 5%

Risk premium on dollar-denominated debt provided by Canada creditors = 3%

Risk premium on Australian-denominated debt provided by Australia creditors = 4%

Beta of project = 90%

Expected Canada market return = 8%

Canada corporate tax rate = 30%

Australia corporate tax rate = 40%

What is Rewards Inc. cost of dollar-denominated equity?

Reference no: EM132020447

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