Estimate the coe in mexican pesos if the expected roe

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Reference no: EM133927097

Problem

You are a cloud company (Zscaler) that is publicly traded in the US. You are planning on expanding into Mexico by investing 15% in a Mexican cloud company. The expected inflation in Mexico is 7%. The country risk premium is 2.7%. The 10-year T-Bond rate is 4% and 10-year TIPS rate is 2%. The COE for Zscaler in dollars is 10%. Get the instant assignment help. Both Zscaler and Mexican company are 100% equity funded. Estimate the COE in Mexican pesos if the expected ROE for Zscaler is 12% for this 15% investment.

Reference no: EM133927097

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