Ganado and Equity Risk Premiums. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.

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Ganado And Equity Risk Premiums Maria Gonzalez Ganado S Chief Financial Officer Estimates The Risk Free Rate To Be 3 1 (131.82 KiB) Viewed 97 times

Ganado and Equity Risk Premiums. Maria Gonzalez, Ganado's Chief Financial Officer, estimates the risk-free rate to be 3.70%, the company's credit risk premium is 3.90%, the domestic beta is estimated at 1.14, the international beta is estimated at 0.98, and the company's capital structure is now 20% debt. The before-tax cost of debt estimated by observing the current yield on Ganado's outstanding bonds combined with bank debt is 8.10% and the company's effective tax rate is 39%. Calculate both the CAPM and ICAPM weighted average costs of capital for the following equity risk premium estimates. a. 8.80% b. 7.90% c. 5.70% d. 4.80%