PETR4.SA WACC - Weighted Average Cost of Capital

The WACC of Petroleo Brasileiro SA Petrobras (PETR4.SA) is 13.9%.

The Cost of Equity of Petroleo Brasileiro SA Petrobras (PETR4.SA) is 22.10%.

The Cost of Debt of Petroleo Brasileiro SA Petrobras (PETR4.SA) is 8.25%.

	Range	Selected
Cost of equity	21.10% - 23.10%	22.10%
Tax rate	30.60% - 31.70%	31.15%
Cost of debt	4.00% - 12.50%	8.25%
WACC	12.0% - 15.8%	13.9%

WACC

PETR4.SA WACC calculation

Category	Low	High

Long-term bond rate	11.9%	12.4%
Equity market risk premium	9.5%	10.5%
Adjusted beta	0.97	0.97

Additional risk adjustments	0.0%	0.5%
Cost of equity	21.10%	23.10%

Tax rate	30.60%	31.70%
Debt/Equity ratio	0.99	0.99
Cost of debt	4.00%	12.50%

After-tax WACC	12.0%	15.8%


Selected WACC	13.9%

PETR4.SA's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for PETR4.SA:

cost_of_equity (22.10%) = risk_free_rate (12.15%) + equity_risk_premium (10.00%) * adjusted_beta (0.97) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.