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COST OF CAPITAL
Cost of Capital to Evaluate Foreign Investments
STEP 2: Calculate the nominal rate for the UK operations
(1 + i)(1 + r) = (1 + n)
(1 + 0.03)(1 + 0.11927) = (1 + n)
1.15285 = (1 + n)
n = 15.28%
Therefore a WACC of 15.28% should be used to
evaluate the UK investment.
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