Thunderhorse Oil is a MNC with operations in several countries around the world. The analyst following Thunderhorse estimates before tax cost of debt is 7%. He finds that the 10 year U.S. Treasury yield the proxy for the risk-free rate of interest in the US is 3%.

The expected market risk premium for a global portfolio is 6%. The company's effective tax rate is 35%. Its optimal capital structure is 40% debt and 60% equity. If Thunderhorse's global beta is estimated at 0.75, what is Thunderhorse's weighted average cost of capital?
 

The Copper Mountain Group, a private equity firm headquartered in Boulder, Colorado borrows GBP 1,000,000 from a British Bank for one year with 7.75% interest. What is the dollar cost of this debt if the pound depreciates from $2.26/GBP to $ 2.20/GBP?

Answer rating: 100% (QA)

The weighted average cost of capital for Thunderhorse is 813 Calculation ... View the full answer