Answer: YTM of the straight debt in US dollars

## Explanation The most appropriate estimate of the cost of debt is **Option A: YTM of the straight debt in US dollars**. **Reasoning:** - The company already has publicly-traded straight debt denominated in US dollars with a credit rating of A - The yield-to-maturity (YTM) of the company's own outstanding debt provides the most direct and accurate measure of its current cost of debt - This reflects the market's current assessment of the company's credit risk in the currency being analyzed (US dollars) - Using peer bonds (Option B) introduces estimation error since peers may have different credit characteristics - Option C is inappropriate because it involves currency conversion adjustments and country risk adjustments that are not necessary when the company already has US dollar-denominated debt **Key Concept:** When a company has publicly-traded debt, the YTM of that debt is typically the best estimate of its current cost of debt.

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