JPMorgan's Latin American Equity Research department produced the following WACC calculation for Petrobrs of Brazil versus Lukoil
Question:
JPMorgan's Latin American Equity Research department produced the following WACC calculation for Petrobrás of Brazil versus Lukoil of Russia in their June 18, 2004, report. Evaluate the methodology and assumptions used in the calculation. Assume a 28% tax rate for both companies.
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Petrobrás 4.8% 7.0% 4.5% 16.3% 0.87 8.4% 0.333 14.7% Lukoil 48% 3,0% Risk-free rate Sovereign risk Equity risk premium Market cost of equity Beta (relevered) Cost of debt Debt/capital ratio WACC 13.5% 1.04 6 .8% 0.475 12.3%
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Petrobrs Lukoil Capital Cost Components Brazil Russia Risk Free Rate 4800 ...View the full answer
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Related Book For
Fundamentals of Multinational Finance
ISBN: 978-0205989751
5th edition
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
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