Cost of Capital Estimator

Table of Contents

• Example
• Workflow
• Common Patterns
• Guardrails
• Quick Reference

Example

Company: Ambev (Brazilian beverage company)

• Incorporated in Brazil; revenue split: Brazil 60%, Latin America 30%, US 10%
• Industry: Beverages (alcoholic and non-alcoholic)
• Current D/E ratio: 25% (market values); marginal tax rate: 34%

Step 1 -- Riskfree rate (BRL analysis)

US 10-year Treasury yield: 4.0%. Brazil government bond: 11.0%. Brazil sovereign default spread (Baa2 rating): 2.5%.