FIN 178
Case Examine
Petrobras of Brazil
(Chapter 14 – web page 399-402)
Case Necessities:
Petrobras Board of Directors has hired to you to assess the company’s cost of capital and asks you to tackle the following questions in your memo.
1. Clarify what is supposed by the time period “Weighted Common Cost of Capital (WACC)” and why the time period ought to be of significance to the Board.
2. Clarify the distinction between “sovereign unfold” and “foreign money threat”. Does the sovereign unfold compensate for foreign money threat?
three. Clarify if the investor notion of Brazil has an impression on the calculation of Petrobras cost of capital. (Clarify your reply in relation to the cost of capital from an fairness and debt perspective)
four. Clarify if the cost of capital is a related consider the competiveness and technique of Petrobras. (a easy sure or no will not be ample – you want to clarify your reply)
Tackle your response of the Petrobras Board of Directors. The due date for this case to be submitted as a memo or letter communication to the aforementioned events is April 21, 2022.
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Petrobras of Brazil (Chapter 14 – pages 399-402) FIN 178 Case Examine
Necessities for the case:
The Petrobras Board of Directors has hired you to consider the firm’s cost of capital and has requested you to write a letter answering the following questions.
1. Describe what the phrase “Weighted Common Cost of Capital (WACC)” is and why the time period is vital to the Board.
2. Distinguish between the phrases “sovereign unfold” and “foreign money threat.” Is the sovereign unfold ample to shield towards foreign money threat?
three. Describe how investor perceptions of Brazil affect Petrobras’ cost of capital calculation. (Clarify how your answer relates to the cost of capital in phrases of fairness and debt.)
four. Describe whether or not the cost of capital is excessive or low.
