Kashmiri's Cost of Capital. Kashmiri is the largest and most successful specialty goods company based in...

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Kashmiri's Cost of Capital. Kashmiri is the largest and most successful specialty goods company based in Bangalore, India. It has not yet entered the North American marketplace, but is considering establishing both manufacturing and distribution facilities in the United States through a wholly owned subsidiary. It has approached two different investment banking advisors, Goldman Sachs and Bank of New York, for estimates of what its costs of capital would be several years into the future when it planned to list its American subsidiary on a U.S. stock exchange. Using the assumptions by the two different advisors in the popup window, calculate the prospective costs of debt, equity, and the WACC for Kashmiri (U.S.). 1 What is the after-tax cost of debt estimated by Goldman Sachs for Kashmiri? % (Round to two decimal places.) Data table - X (Click on the following icon in order to copy its contents into a spreadsheet.) Bank of Goldman Assumptions Estimate of correlation Symbol Pim Sachs New York 0.88 0.48 between security and market 24.3% 30.6% Estimate of standard deviation of Kashmiri's returns Estimate of standard om 18.1% 22.8% deviation of market's return Risk-free rate of Kf 3.6% 3.6% interest Estimate of Kashmiri's Ko 7.1% 7.3% er cost of debt in U.S. market Estimate of market Km 9.5% 11.7% return, forward-looking 39% 39% Corporate tax rate Proportion of debt DIV 30% 35% EIV 70% 65% Proportion of equity Kashmiri's Cost of Capital. Kashmiri is the largest and most successful specialty goods company based in Bangalore, India. It has not yet entered the North American marketplace, but is considering establishing both manufacturing and distribution facilities in the United States through a wholly owned subsidiary. It has approached two different investment banking advisors, Goldman Sachs and Bank of New York, for estimates of what its costs of capital would be several years into the future when it planned to list its American subsidiary on a U.S. stock exchange. Using the assumptions by the two different advisors in the popup window, calculate the prospective costs of debt, equity, and the WACC for Kashmiri (U.S.). 1 What is the after-tax cost of debt estimated by Goldman Sachs for Kashmiri? % (Round to two decimal places.) Data table - X (Click on the following icon in order to copy its contents into a spreadsheet.) Bank of Goldman Assumptions Estimate of correlation Symbol Pim Sachs New York 0.88 0.48 between security and market 24.3% 30.6% Estimate of standard deviation of Kashmiri's returns Estimate of standard om 18.1% 22.8% deviation of market's return Risk-free rate of Kf 3.6% 3.6% interest Estimate of Kashmiri's Ko 7.1% 7.3% er cost of debt in U.S. market Estimate of market Km 9.5% 11.7% return, forward-looking 39% 39% Corporate tax rate Proportion of debt DIV 30% 35% EIV 70% 65% Proportion of equity