Based on the CAPM, Everhart's cost of equity![2216_kk.jpg](https://secure.tutorsglobe.com/CMSImages/2216_kk.jpg)
b. Philippine debt has a high interest rate. Also, the peso will appreciate so the debt is even more expensive. Everhart should finance with dollar-denominated debt.
c. Philippine debt is cheaper than Philippine equity. The Philippine investor would require a higher return than if Everhart uses debt. Also, there is no tax advantage if Everhart accepted an equity investment.