LocalEquity B x 1 - Hist + (Debtp x Hist - ) once I have this for all the companies in the industry I average out to get an estimate of the Beta on the assets for Nextel Peru and it comes out to be f = S.62 Us risk free 3.08% Peru risk free 5.05% Us MRP 5% Us Cost of Cap 6.56% Peru Cost of Cap 8.60% (return on assets) Both risk free rates for Us and Peru are given by the case. Also the US market risk premium is given by the case. To calculate Us cost of capital I use the formula: Assets-us = f-us + (USMRP + CountryMRP) and I get 6.56%. Country risk premium is calculated and I will explain the steps in question 5. To calculate then the required return on assets for Peru I use the following: Ass+ts-Ptru= (1+)x (1 + 7 f-p+ru) - 1 (1 + 1 6-25)