What is the cost of capital in dollar

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KKK, a U.S. MNC, is contemplating making a foreign capital expenditure in India. The initial cost of the project is Indian Rupee (INR) 72mil. The annual cash flows over the three year economic life of the project in INR are estimated to be 20mil, 30mil, and 55mil. The parent firm's cost of debt is 8%; equity beta is 1.3; US market return is 9%; US government bond yield is 3%; company tax rate is 30%. Long-run inflation is forecasted to be 3 percent per annum in the U.S. and 7 percent in India. The current spot foreign exchange rate is INR/USD = 72.00.

What is the cost of capital (WACC) in dollar

Reference no: EM132396531

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