JPMorgan. 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. JPMorgan's Latin American Equity Research department produced the following WACC calculation, , for Petrobrs of Brazil versus Lukoil of Russia. Evaluate the methodology and assumptions used in the calculation. Assume a 28% tax rate for both companies. Which of the following statements is correct? (Select the best choice below.) A. This approach applies the sovereign risk premium to the cost of equity for both companies and the WACC calculation is based in U.S. dollars. B. This approach applies the sovereign risk premium to the cost of debt for both companies and the WACC calculation is based in U.S. dollars. C. This approach applies the sovereign risk premium to the cost of debt for both companies and the WACC calculation is based in Brazilian reais. D. This approach excludes the sovereign risk premium from both the cost of equity and cost of debt for both companies and the WACC calculation is based in Brazilian reais