Nestle is a Swiss-based MNC that produces and distributes a variety of food products.
Rf =3.3%; RSZ =10%; bN-SZ =0.885; RW =11%; bN-W =0.585.
Assume that Nestle pays 4% for its debt, has a debt/total capitalization ratio of 0.35 and pays a tax rate of 20%.
Calculate the cost of equity capital for Nestle assuming
(i) Swiss market is segmented, and
(ii) Swiss market is perfectly globally integrated
(iii) Calculate Nestle’s WACC, considering the Swiss market is globally integrated.