Ahmad are just appointed as a financial analyst in Catalyst Berhad. Currently, the 3-month treasury bill is at 3.00% and the company's credit risk premium is 6.00%, the domestic beta is estimated at 1.25, the international beta at .95, and the company's capital structure is now 60% debt. Other financial details are as following. Domestic International Assumptions CAPM ICAPM Cost of debt, before tax, kd 7.00% 5.00% Corporate income tax rate, t 28% 28% General return on market portfolio, km 9.00% 8.00% For both the domestic CAPM and ICAPM, calculate cost of equity weighted Average Cost of Capital
Ahmad are just appointed as a financial analyst in Catalyst Berhad. Currently, the 3-month treasury bill is at 3.00% and the company's credit risk premium is 6.00%, the domestic beta is estimated at 1.25, the international beta at .95, and the company's capital structure is now 60% debt. Other financial details are as following. Domestic International Assumptions CAPM ICAPM Cost of debt, before tax, kd 7.00% 5.00% Corporate income tax rate, t 28% 28% General return on market portfolio, km 9.00% 8.00% For both the domestic CAPM and ICAPM, calculate cost of equity weighted Average Cost of Capital
Chapter14: Capital Structure Management In Practice
Section: Chapter Questions
Problem 21P
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- Ahmad are just appointed as a financial analyst in Catalyst Berhad. Currently, the 3-month treasury bill is at 3.00% and the company's credit risk premium is 6.00%, the domestic beta is estimated at 1.25, the international beta at .95, and the company's capital structure is now 60% debt. Other financial details are as following.
|
|
Domestic |
|
International |
Assumptions |
|
|
|
ICAPM |
Cost of debt, before tax, kd |
|
7.00% |
|
5.00% |
Corporate income tax rate, t |
|
28% |
|
28% |
General return on market portfolio, km |
|
9.00% |
|
8.00% |
For both the domestic CAPM and ICAPM, calculate
cost of equity
- weighted Average Cost of Capital
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