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Assume the following information for Pexi Co.,a U.S.-based MNC that is considering obtaining funding for a project in Germany:
U.S.risk-free rate = 4%
German risk-free rate = 5%
Risk premium on dollar-denominated debt provided by U.S.creditors = 3%
Risk premium on euro-denominated debt provided by German creditors = 4%
Beta of project = 1.2
Expected U.S.market return = 10%
U.S.corporate tax rate = 30%
German corporate tax rate = 40%
What is Pexi's cost of dollar-denominated debt
Dividend Increases
Instances where a company raises the amount of money it pays to its stockholders in dividends.
Market Rate
The prevailing interest rate or cost of borrowing in the financial markets at any given time.
Annual Dividend
A yearly payment made by a corporation to its shareholders, usually derived from profits.
Total Return
Total return is the full return on an investment over a given period, including all dividends, interest, and capital gains, adjusted for any capital losses.
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