Chapter 15, Question 1 l. A rm with a corporate-wide debtfequity ratio of 1:2, an after-tax cost of debt of T percent, and a cost of equity capital of 1 5 percent is interested in pursuing a foreign project. The debt capacity of the project is die same as for the company as a whole, but its systematic risk is such that the required return on equity is estimated to be about 12 percent The aftertax cost of debt is expected to remain at 5' percent a. What is the project's weighted average cost of capital?I How does it compare widi the parent's WAGE? b. If the project's equity beta is 1.21, what is its unleyered beta?I Chapter 15, Question 4 4. IBM is considering bayin g its e rrnan affiliate issue a 10-year. $11310 million bond denominated in euros and priced to yield 15 percent. Alternatively, IBM's German unit can issue a dollar-denominated bond of die same size and maturity and carrying an interest rate of 6.? percent. a. If the euro is forecast to depreciate by 1.? percent annually. what is the expected dollar cost of the euro- denominated bond?I How does this compare to the cost of the dollar bond?l b. At what rate of euro depreciation will the dollar cost of the eu rodenorninated bond equal die dollar cost of the dollar-denominated bond? c. Suppose IBM's German unit faces a 35 percent corporate tax rate. What is the expected after-tax dollar cost of the euro-denominated bond