MegaFon stock on the Moscow Stock Exchange trades with a beta of = 1. 71 while

MegaFon stock on the Moscow Stock Exchange trades with a beta of β = 1. 71 while the risk-free rate and risk premium are, respectively, 6 percent and 7 percent.

a. Compute MegaFon’s cost of equity capital on November 1, 2012 (before its foreign listing).

b. Compute MegaFon’s cost of equity capital on December 1, 2012 (after its foreign listing). MegaFon’s newly traded GDR on the LSE has a beta of β = 1. 61 while the risk-free rate and risk premium stand at 3 percent and 4 percent, respectively.

c. What are the costs and benefits for MegaFon of listing on the LSE?