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Estimate the cost of debt for petrobras in brl terms

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Reference no: EM132661838

Petrobras Petroleo Brasileiro S.A. or Petrobras is the national oil company of Brazil. It has expanded its operation in Bolivia and considering raising debt in local currency. The following information is available for the analysts:

- Length of loan is for 3 years.

- Principal to be borrowed is Bolivian boliviano 50,000,000.

- The interest rate on the loan is 5.0%.

- At present the BOB/BRL exchange rate is BOB 1.91/ BRL.

- For the each of next three years it is expected that the BOB currency will appreciate 1% against BRL.

Based on these information estimate the cost of debt for Petrobras in BRL terms.

Reference no: EM132661838

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