Holdings, an Asia-Pacific telecommunications company, has excess capital and is looking to make a regional telecommunications investment. Corp won…

8%

The prevailing corporate marginal tax rate is 20%, the expected return on the market portfolio is 15%, and the risk-free rate is 5%. Assume the firm’s cost of debt does not vary with capital structure and financial distress is costless.

What is and justify a suitable weighted average cost of capital based on T. Holdings’ existing capital structure?