Corporate Finance: Instructor\'s Manual Applied Corporate Finance

Aswath Damodaran 350

Aracruz’s Current Cost of Capital

! Current $ Cost of Equity = 4 % + 0. 7040 ( 12. 49 %) = 12. 79 %

! Market Value of Equity = 10. 69 BR/share * 859. 59 = 9 , 189 million BR

Current $ Cost of Capital

= 12. 79 % ( 9 , 189 /( 9 , 189 + 4 , 094 )) + 7. 25 % ( 1 -. 34 ) ( 4 , 094 /( 9189 + 4 , 094 ) = 10. 33 %