16. Maria Kajia is now evaluating company XYZ. The risk-free rate to be 3.65%, yield on company XYZ bonds is 6.5%. The correlation between domestic market and company XYZ is 0.75. The standard...

16. Maria Kajia is now evaluating company XYZ. The risk-free rate to be 3.65%, yield on company XYZ bonds is 6.5%. The correlation between domestic market and company XYZ is 0.75. The standard deviation on company XYZ returns is 25.5%. The estimated standard deviation on domestic market returns are 20%. The correlation between international market and company XYZ is 0.65. The standard deviation on company XYZ returns is 25.5% in international market. The estimated standard deviation on international market returns are 18.5%. The domestic general return on market portfolio is estimated at 8.5% and in international market it is estimated at 7.25%. All other values remain the same. The equity ratio of the company XYZ is 60% financing through equity. The effective tax rate is 28%. i. Company XYZ cost of equity in domestic and international market.​ ii. Company XYZ cost of debt. ​​​​​ iii. Company XYZ WACC in domestic and international market. ​​ ​

Jun 06, 2022
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