Citigroup SmithBarney (Reais). In a report dated June 17, 2003, Citigroup SmithBarney calculated a WACC for Petrobrás denominated in Brazilian reais (R$). Evaluate the methodology and assumptions used in this cost of capital calculation. Risk-free rate (Brazilian C-Bond) Petrobrás levered beta Market risk premium Cost of equity Cost of debt Brazilian corporate tax rate Long-term debt ratio (% of capital) WACC (RS) 9.90% 1.40 5.50% 17.60% 10.00% 34.00% 50.60% 12.00%

Citigroup SmithBarney (Reais). In a report dated June 17, 2003, Citigroup SmithBarney calculated a WACC for Petrobrás denominated in Brazilian reais (R$). Evaluate the methodology and assumptions used in this cost of capital calculation. Risk-free rate (Brazilian C-Bond) Petrobrás levered beta Market risk premium Cost of equity Cost of debt Brazilian corporate tax rate Long-term debt ratio (% of capital) WACC (RS) 9.90% 1.40 5.50% 17.60% 10.00% 34.00% 50.60% 12.00%

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 1hM

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Question

Citigroup SmithBarney (Reais). In a report dated June 17, 2003, Citigroup
SmithBarney calculated a WACC for Petrobrás denominated in Brazilian reais (R$).
Evaluate the methodology and assumptions used in this cost of capital calculation.
Risk-free rate (Brazilian C-Bond)
Petrobrás levered beta
Market risk premium
Cost of equity
Cost of debt
Brazilian corporate tax rate
Long-term debt ratio (% of capital)
WACC (RS)
9.90%
1.40
5.50%
17.60%
10.00%
34.00%
50.60%
12.00%

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