BBVA Investment Bank. Petrobrs Petrleo Brasileiro S.A or Petrobras is the national oil company of Brazil It is publicly traded, but the government of Brazil holds the controlling share It is the largest company in the Southern Hemisphere by market capitalization and the largest in all of Latin America As an oil company, the primary product of its production has a price set on global markets-the price of oil-and much of its business is conducted in the global currency of oil, the U.S. dollar. BBVA utilizedherinnovative approach to dealing with both country and currency risk in their December 20, 2004, report on Petrobras, EEB calculation Evaluate the methodology and asumptions used in this cost of capital Is the following statements true or false? | (Select from the drop down menu ) This analysis begins with a U.S. dollar-based risk-free rate, adds a country risk premium to it, and then adjusts the sum downward for a Petrobras premium. The resulting cost of equity is then converted from reais to dollars with the application of a currency devaluation multiplier, a stated average expectation for the coming decade. The cost of debt assumed is very low, which is clearly a dollar cost and not a reais cost as stated The final WACC in reais terms is roughly equivalent to the various estimates from various methods