Citigroup SmithBarney (Reais). 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 marketsthe price of oiland much of its business is conducted in the global currency of oil, the U.S. dollar.

In their report, LOADING..., Citigroup SmithBarney calculated a WACC for Petrobrs denominated in Brazilian reais (R$). Evaluate the methodology and assumptions used in this cost of capital calculation as shown in the table.

- Data table Risk-free rate (Brazilian C-Bond) 9.90% Petrobrs levered beta 1.40 Market risk premium 5.50% Cost of equity 17.60% Cost of debt 10.00% Brazilian corporate tax rate 34.00% Long-term debt ratio (% of capital) 50.60% WACC (R$) 12.00% Click on the icon located on the top-right comer of the data table in order to copy its contents into a spreadsheet. Print Done