The various estimates of the cost of capital for Petrobras of Brazil appear to be very different, but are they? Reorganize your answers to the previous five prolbems into those costs of capital which are in U.S. dollars versus Brazilian reais. Use the estimates for 2004 as the basis of comparison. U.S. dollar WACCS Brazilian reais WACCS UNIBANCO JPMorgan (June 18, 2004) Citigroup ($) (March 8, 2005) Citigroup (RS) (June 17, 2003) BBVA Capital Cost Components (Aug 12, 2004) (Dec 20, 2004) Risk Free Rate 4.800% 9.400% 4.500% 9.900% 4.400% Sovereign/Country Risk Premium Petrobras Company Premium "Adjusted" Risk Free Rate 7.000% 0.000% 5.500% 0.000% 4.000% 0.000% 0.000% 0.000% 0.000% -1.000% Levered Beta 0.87 1.09 0.99 1.40 0.80 Market/Equity Risk Premium Cost of equity (USS) 4.500% 5.500% 6.000% 5.500% 6.000% Exchange Rate 2.000% 0.000% 2.000% Cost of equity (RS) Cost of Debt 8.400% 8.400% 8.600% 10.000% 8.500% Tax rate 28.000% 27.100% 34.000% 34.000% 35.000% Cost of debt, after-tax Debt/Capital ratio Equity/Capital ratio 33.300% 32.400% 40.000% 50.600% 28.000% 66.700% 67.600% 60.000% 49.400% 72.000% WACC (calculated) WACC (I-bank report) 14.7% 12.3% 13.2% 12.0% 12.0%