You have been asked to estimate the beta for a large South Korean company, with large holdings in steel and financial services. A regression of stock returns against the local market index yields a beta of 1.28, but the firm is 0.28 of the index. You have collected the average betas for global companies in each of the sectors, as well as the average debt equity ratios in each sector.

	Average Beta	Average D/E Ratio
Steel	1.39	0.44
Financial Services	1.47	0.7

(The average tax rate for these firms is 0.44)

In the most recent period, the company you are analyzing earned 0.73 of its operating income from steel and 0.3 from financial services. The firm also had a debt/equity ratio of 0.54, and a tax rate of 0.49.

If the Korean government bond rate in nominal Won is 0.18, Korea's rating is BBB (Country bonds with this rating earn a spread of 0.05 over the U.S. long bond rate) and Korean equities are twice as volatile as Korean bonds. US risk premium is 0.07 estimate the cost of equity for this company (You need to estimate the beta for the company first).