Question: Please help with part C -Using the domestic CAPM, what is Ganado's weighted average cost of capital? I got a and b correct Ganado's Cost
Please help with part C -Using the domestic CAPM, what is Ganado's weighted average cost of capital? I got a and b correct

Ganado's Cost of Capital. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.30%, the company's credit risk premium is 3.90%, the domestic beta is estimated at 0.98, the international beta is estimated at 0.76, and the company's capital structure is now 50% debt. The expected rate of return on the market portfolio held by a well-diversified domestic investor is 9.60% and the expected return on a larger globally integrated equity market portfolio is 8.50%. The before-tax cost of debt estimated by observing the current yield on Ganado's outstanding bonds combined with bank debt is 7.80% and the company's effective tax rate is 30%. For both the domestic CAPM and ICAPM, calculate the following: a. Ganado's cost of equity b. Ganado's after-tax cost of debt c. Ganado's weighted average cost of capital a. Using the domestic CAPM, what is Ganado's cost of equity? 9.47 % (Round to two decimal places.) Using the ICAPM, what is Ganado's cost of equity? 7.25 % (Round to two decimal places.) b. Using the domestic CAPM, what is Ganado's after-tax cost of debt? 5.46 % (Round to two decimal places.) Using the ICAPM, what is Ganado's after-tax cost of debt? 5.46 % (Round to two decimal places.) c. Using the domestic CAPM, what is Ganado's weighted average cost of capital? 7.47 % (Round to two decimal places.) Using the ICAPM, what is Ganado's weighted average cost of capital? % (Round to two decimal places.) 1
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