Ganado and Equity Risk Premiums. Maria? Gonzalez, Ganado's Chief Financial? Officer, estimates the? risk-free rate to be 3.10%?, the? company's credit risk premium is 4.40?%,the domestic beta is estimated at 1.11?, the international beta is estimated at 0.83?, and the? company's capital structure is now 50?% 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 42?%. Calculate both the CAPM and ICAPM weighted average costs of capital for the following equity risk premium estimates.
a. 8.00%
b. 6.90%
c. 5.10%
d. 4.00
Can you show work step by step please to solve the problem