By reviewing the following attached information, answer the following questions:
Problem 1. Diageo subtracts the value of its portfolio of short-term investments, which is held outside the United States and is not required to support day-to-day operations, from its total debt when calculating its "net debt ratio." Use Diageo's net debt ratio to calculate Diageo's overall WACC.
Problem 2. Should Diageo use its overall cost of capital to evaluate its restaurant investments? Under what circumstances would it be correct to do so?
Problem 3. Estimate the cost of capital for Diageo's restaurant businesses.
Problem 4. Explain why there is a difference between Diageo's overall cost of capital and the cost of capital for its restaurant businesses.
Attachment:- Divisional cost of capital.rar