Let's assume the following information for Rewards Inc., a Canada-based multinational company that is considering obtaining funding for a project in Australia:
Canada risk-free rate = 4%
Australia risk-free rate = 5%
Risk premium on dollar-denominated debt provided by Canada creditors = 3%
Risk premium on Australian-denominated debt provided by Australia creditors = 4%
Beta of project = 90%
Expected Canada market return = 8%
Canada corporate tax rate = 30%
Australia corporate tax rate = 40%
What is Rewards Inc. cost of dollar-denominated equity?