For the risk-free rate, see the yield on 30-year government bonds for January 2007.

January 2007 is the starting date of

the project activity, and 30 years is the appropriate period, as 30 years is the expected lifetime of the project activity
We use the average value over the month of

4.84%

Industry Name

Number of Firms Average Beta Market D/E Ratio Tax Rate Unlevered Beta

Advertising

40

1.60

Aerospace/Defense

69

1.19

Air Transport

49

1.40

Apparel

57

0.87

Auto & Truck

28

1.54

Auto Parts

56

1.45

504

0.63

Bank (Canadian)

0.67

Bank (Midwest)

38

0.85

Beverage

44

0.89

103

1.51

Building Materials

49

1.07

Cable TV

23

1.56

Canadian Energy

13

0.80

Chemical (Basic)

19

1.52

Chemical (Diversified)

37

1.16

Chemical (Specialty)

90

1.06

Coal

18

1.71

Computer Software/Svcs

376

1.56

Computers/Peripherals

144

1.86

Diversified Co.

107

1.03

Drug

368

1.78

E-Commerce

56

2.08

Educational Services

39

1.27

Electric Util. (Central)

25

0.93

Electric Utility (East)

27

0.84

Electric Utility (West)

17

0.88

Electrical Equipment

86

1.35

179

1.32

Entertainment

93

1.53

Entertainment Tech

38

2.06

Bank

Biotechnology

Electronics

Environmental

89

1.00

Financial Svcs. (Div.)

294

1.14

Food Processing

123

0.77

Food Wholesalers

19

0.79

Foreign Electronics

10

1.08

Furn/Home Furnishings

39

1.10

Grocery

15

0.99

Healthcare Information

38

0.91

Heavy Construction

12

1.25

40.78%
16.18%
48.14%
19.85%
98.16%
46.73%
42.17%
5.91%
39.81%
11.48%
9.09%
29.48%
59.85%
16.68%
15.59%
13.80%
17.92%
14.12%
3.44%
5.77%
15.96%
7.79%
3.36%
1.35%
72.72%
46.30%
60.31%
80.88%
14.17%
37.17%
2.79%
45.33%
193.48%
18.03%
48.30%
20.91%
31.44%
30.21%
12.70%
3.60%

14.93%

1.19

21.13%

1.06

17.38%

1.00

25.25%

0.76

22.92%

0.88

17.75%

1.05

27.88%

0.48

19.07%

0.64

27.80%

0.66

16.73%

0.81

4.11%

1.38

23.79%

0.87

20.04%

1.06

27.13%

0.71

16.97%

1.35

26.20%

1.05

19.01%

0.93

10.36%

1.52

10.75%

1.51

8.41%

1.77

19.54%

0.92

5.95%

1.66

15.82%

2.02

20.74%

1.26

26.66%

0.61

29.51%

0.63

31.69%

0.62

14.92%

0.80

13.25%

1.17

15.50%

1.17

9.03%

2.01

11.44%

0.71

17.36%

0.44

19.34%

0.67

31.85%

0.60

33.95%

0.95

23.96%

0.89

28.20%

0.81

14.55%

0.82

29.84%

1.21

Home Appliance

11

0.95

Homebuilding

36

1.64

Hotel/Gaming

75

1.25

Household Products

28

0.89

Human Resources

35

1.38

Industrial Services

196

1.22

Information Services

38

1.05

Insurance (Life)

40

0.94

Insurance (Prop/Cas.)

87

0.89

266

1.97

Investment Co.

18

0.71

Investment Co.(Foreign)

15

1.31

126

1.19

Manuf. Housing/RV

18

1.92

Maritime

52

0.87

Medical Services

178

1.10

Medical Supplies

274

1.43

Metal Fabricating

37

1.19

Metals & Mining (Div.)

78

1.05

Natural Gas (Div.)

31

0.93

Natural Gas Utility

26

0.78

Newspaper

18

1.21

Office Equip/Supplies

25

1.13

Oil/Gas Distribution

15

0.72

Oilfield Svcs/Equip.

113

1.10

Packaging & Container

35

1.12

Paper/Forest Products

39

0.93

Petroleum (Integrated)

26

1.02

Petroleum (Producing)

Internet

Machinery

186

1.00

Pharmacy Services

19

1.07

Power

58

1.87

Precious Metals

84

1.11

103

1.66

Property Management

12

0.91

Publishing

40

1.35

R.E.I.T.

147

0.90

Railroad

16

1.23

Recreation

73

1.54

Reinsurance

11

1.01

Restaurant

75

0.93

164

1.26

Precision Instrument

Retail (Special Lines)

21.66%
128.82%
35.53%
17.13%
7.51%
23.79%
10.06%
8.38%
1.21%
1.83%
0.54%
0.00%
23.74%
14.24%
50.70%
19.18%
8.04%
10.16%
6.57%
30.04%
66.33%
50.03%
32.20%
39.45%
11.25%
52.48%
40.85%
7.96%
19.09%
9.79%
11.96%
7.19%
10.40%
87.17%
34.25%
40.49%
26.06%
28.20%
6.45%
14.33%
12.39%

15.98%

0.81

23.61%

0.83

12.97%

0.96

29.49%

0.80

23.43%

1.30

16.12%

1.02

19.94%

0.97

27.97%

0.89

19.80%

0.88

6.76%

1.94

0.00%

0.71

2.20%

1.31

22.70%

1.01

16.88%

1.71

5.49%

0.59

16.18%

0.95

11.47%

1.34

18.27%

1.10

7.73%

0.99

22.37%

0.75

25.92%

0.52

22.27%

0.87

27.71%

0.92

5.20%

0.52

20.11%

1.01

21.03%

0.79

14.27%

0.69

32.20%

0.97

14.95%

0.86

21.25%

0.99

8.06%

1.69

4.90%

1.04

16.50%

1.53

15.99%

0.52

15.56%

1.05

1.16%

0.64

32.19%

1.04

18.25%

1.25

10.70%

0.96

20.74%

0.83

22.68%

1.15

Retail Automotive

16

1.58

1.23

Retail Store

42

1.11

Securities Brokerage

31

1.66

138

2.59

Semiconductor Equip

16

2.51

Shoe

20

1.47

Steel (General)

26

1.71

Steel (Integrated)

14

1.97

Telecom. Equipment

124

1.98

Telecom. Services

152

1.34

Thrift

234

0.59

Tobacco

11

0.70

Toiletries/Cosmetics

21

0.85

Trucking

32

1.04

1.01

16

0.78

74

2.20
1.24

Retail Building Supply

Semiconductor

Utility (Foreign)
Water Utility
Wireless Networking
Market

7364

42.14%
19.39%
17.29%
123.16%
4.53%
8.91%
2.62%
11.01%
18.90%
5.51%
33.71%
26.20%
7.54%
16.22%
48.80%
3.09%
50.95%
14.09%
25.12%

36.04%

1.24

37.24%

1.10

24.46%

0.98

22.95%

0.85

11.65%

2.49

25.66%

2.35

32.17%

1.44

30.16%

1.59

23.94%

1.73

12.78%

1.89

12.42%

1.03

20.69%

0.49

27.57%

0.66

18.34%

0.75

31.50%

0.78

0.00%

0.98

33.23%

0.58

11.52%
16.25%

1.96
1.03

Source: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/ Levered and Unlevered Beta by Industry 2

Cash/Firm ValueUnlevered Beta corrected for cash

9.82%
5.20%
13.46%
6.50%
11.96%
10.38%
6.76%
2.87%
7.39%
1.91%
9.73%
4.97%
3.83%
1.14%
2.91%
4.31%
5.01%
1.67%
8.68%
10.02%
4.98%
8.65%
11.84%
6.25%
1.80%
1.37%
2.91%
8.50%
11.42%
5.13%
14.76%
1.93%
9.30%
2.23%
4.76%
16.87%
5.74%
2.08%
9.01%
8.60%

1.32
1.12
1.15
0.81
1.00
1.17
0.52
0.66
0.72
0.82
1.53
0.92
1.10
0.72
1.39
1.10
0.98
1.55
1.66
1.97
0.96
1.82
2.29
1.34
0.62
0.64
0.64
0.87
1.32
1.23
2.35
0.73
0.48
0.69
0.63
1.15
0.94
0.83
0.90
1.33

4.63%
9.41%
2.80%
2.34%
13.63%
6.33%
3.80%
9.72%
1.49%
7.36%
1.04%
4.08%
3.56%
12.70%
3.98%
8.79%
4.20%
3.96%
2.30%
1.72%
2.14%
2.06%
7.23%
2.50%
3.51%
3.16%
5.64%
3.83%
1.27%
1.90%
1.67%
6.10%
10.49%
7.04%
2.10%
7.46%
2.23%
5.26%
14.16%
3.19%
10.71%

0.85
0.92
0.99
0.82
1.51
1.09
1.01
0.99
0.90
2.09
0.71
1.36
1.04
1.96
0.62
1.04
1.40
1.14
1.02
0.77
0.53
0.89
0.99
0.53
1.05
0.82
0.73
1.01
0.87
1.01
1.72
1.11
1.71
0.56
1.07
0.70
1.07
1.32
1.12
0.86
1.28

4.11%
1.54%
4.54%
13.25%
11.18%
13.98%
8.51%
7.66%
5.82%
14.61%
3.35%
8.04%
2.07%
4.87%
5.26%
4.53%
1.05%
5.23%

1.30

6.02%

1.09

Unlevered Beta by Industry 2007

1.12
1.03
0.98
2.81
2.74
1.58
1.72
1.83
2.21
1.07
0.53
0.68
0.79
0.82
1.03
0.59
2.07

Country
LongTermRatingAdj.DefaultSpre TotalRiskPremiCountryRiskPremium
Albania
B1
350
10.04%
5.25%
Alderney(ChannelIsland
Aaa
0
4.79%
0.00%
Andorra
Aaa
0
4.79%
0.00%
Argentina
B3
450
11.54%
6.75%
Armenia
Ba2
250
8.54%
3.75%
Australia
Aaa
0
4.79%
0.00%
Austria
Aaa
0
4.79%
0.00%
Azerbaijan
Ba1
200
7.79%
3.00%
Bahamas
A1
70
5.84%
1.05%
BahamasOffshore
Aaa
0
4.79%
0.00%
Bahrain
A2
80
5.99%
1.20%
BahrainOffshore
Aa3
60
5.69%
0.90%
Barbados
A3
85
6.07%
1.28%
Belarus
B1
350
10.04%
5.25%
Belgium
Aa1
35
5.32%
0.53%
Belize
Caa1
600
13.79%
9.00%
Bermuda
Aaa
0
4.79%
0.00%
Bolivia
B3
450
11.54%
6.75%
Bosnia&Herzogovina
B2
400
10.79%
6.00%
Botswana
A1
70
5.84%
1.05%
Brazil
Ba1
200
7.79%
3.00%
Bulgaria
Baa3
135
6.82%
2.03%
Cambodia
B2
400
10.79%
6.00%
Canada
Aaa
0
4.79%
0.00%
CaymanIslands
Aa1
35
5.32%
0.53%
CaymanIslands
Aaa
0
4.79%
0.00%
Chile
A1
70
5.84%
1.05%
China
A1
70
5.84%
1.05%
Colombia
Baa3
135
6.82%
2.03%
CostaRica
Ba1
200
7.79%
3.00%
Croatia
Baa1
100
6.29%
1.50%
Cuba
Caa1
600
13.79%
9.00%
Cyprus
A1
70
5.84%
1.05%
CzechRepublic
A1
70
5.84%
1.05%
Denmark
Aaa
0
4.79%
0.00%
DominicanRepublic
B2
400
10.79%
6.00%
Ecuador
B3
450
11.54%
6.75%
Egypt
Baa3
135
6.82%
2.03%
ElSalvador
Baa2
115
6.52%
1.73%
Estonia
A1
70
5.84%
1.05%

Eurozone
FijiIslands
Finland
France
Germany
Greece
Guatemala
Guernsey(ChannelIslan
Honduras
HongKong
Hungary
Iceland
India
Indonesia
Ireland
IsleofMan
Israel
Italy
Jamaica
Japan
Jersey(ChannelIsland)
Jordan
Kazakhstan
Korea
Kuwait
Latvia
Lebanon
Liechtenstein
Lithuania
Luxembourg
Macao
Malaysia
Malta
Mauritius
Mexico
Moldova
Monaco
Mongolia
Morocco
Netherlands
NewZealand

Aaa
Ba2
Aaa
Aaa
Aaa
A1
Ba1
Aaa
B2
Aa2
A2
Aaa
Ba2
Ba3
Aaa
Aaa
A2
Aa2
Ba2
A1
Aaa
Baa3
Baa1
A2
Aa2
A2
B3
Aaa
A2
Aaa
Aa3
A3
A2
Baa2
Baa1
Caa1
Aaa
B1
Ba1
Aaa
Aaa

0
250
0
0
0
70
200
0
400
50
80
0
250
300
0
0
80
50
250
70
0
135
100
80
50
80
450
0
80
0
60
85
80
115
100
600
0
350
200
0
0

4.79%
8.54%
4.79%
4.79%
4.79%
5.84%
7.79%
4.79%
10.79%
5.54%
5.99%
4.79%
8.54%
9.29%
4.79%
4.79%
5.99%
5.54%
8.54%
5.84%
4.79%
6.82%
6.29%
5.99%
5.54%
5.99%
11.54%
4.79%
5.99%
4.79%
5.69%
6.07%
5.99%
6.52%
6.29%
13.79%
4.79%
10.04%
7.79%
4.79%
4.79%

0.00%
3.75%
0.00%
0.00%
0.00%
1.05%
3.00%
0.00%
6.00%
0.75%
1.20%
0.00%
3.75%
4.50%
0.00%
0.00%
1.20%
0.75%
3.75%
1.05%
0.00%
2.03%
1.50%
1.20%
0.75%
1.20%
6.75%
0.00%
1.20%
0.00%
0.90%
1.28%
1.20%
1.73%
1.50%
9.00%
0.00%
5.25%
3.00%
0.00%
0.00%

Nicaragua
Norway
Oman
Pakistan
Panama
PanamaOffshoreBanks
PapuaNewGuinea
Paraguay
Peru
Philippines
Poland
Portugal
Qatar
Romania
Russia
SanMarino
Sark(ChannelIslands)
SaudiArabia
Singapore
Slovakia
Slovenia
SouthAfrica
Spain
St.Vincent
Suriname
Sweden
Switzerland
Taiwan
Thailand
Trinidad&Tobago
Tunisia
Turkey
Turkmenistan
Ukraine
UnitedArabEmirates
UnitedKingdom
UnitedStates
Uruguay
Venezuela
Vietnam

B3
Aaa
A2
B1
Ba1
Aa2
B1
Caa1
Baa3
B1
A2
Aa2
Aa2
Baa3
Baa2
Aaa
Aaa
A1
Aaa
A1
Aa2
A2
Aaa
B1
Ba3
Aaa
Aaa
Aa3
Baa1
Baa1
Baa2
Ba3
B2
B1
Aa2
Aaa
Aaa
B1
B1
Ba3

450
0
80
350
200
50
350
600
135
350
80
50
50
135
115
0
0
70
0
70
50
80
0
350
300
0
0
60
100
100
115
300
400
350
50
0
0
350
350
300

11.54%
4.79%
5.99%
10.04%
7.79%
5.54%
10.04%
13.79%
6.82%
10.04%
5.99%
5.54%
5.54%
6.82%
6.52%
4.79%
4.79%
5.84%
4.79%
5.84%
5.54%
5.99%
4.79%
10.04%
9.29%
4.79%
4.79%
5.69%
6.29%
6.29%
6.52%
9.29%
10.79%
10.04%
5.54%
4.79%
4.79%
10.04%
10.04%
9.29%

6.75%
0.00%
1.20%
5.25%
3.00%
0.75%
5.25%
9.00%
2.03%
5.25%
1.20%
0.75%
0.75%
2.03%
1.73%
0.00%
0.00%
1.05%
0.00%
1.05%
0.75%
1.20%
0.00%
5.25%
4.50%
0.00%
0.00%
0.90%
1.50%
1.50%
1.73%
4.50%
6.00%
5.25%
0.75%
0.00%
0.00%
5.25%
5.25%
4.50%

Source: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/ Risk Premiums for Other Markets 2007

Region
Eastern Europe & Russia
Financial Centers
Central and South America
Eastern Europe & Russia
Australia & New Zealand
Western Europe
Eastern Europe & Russia
Caribbean
Financial Centers
Middle East
Financial Centers
Caribbean
Eastern Europe & Russia
Western Europe
Central and South America
Caribbean
Central and South America
Eastern Europe & Russia
Africa
Central and South America
Eastern Europe & Russia
Asia
North America
Caribbean
Financial Centers
Central and South America
Asia
Central and South America
Central and South America
Eastern Europe & Russia
Caribbean
Western Europe
Eastern Europe & Russia
Western Europe
Caribbean
Central and South America
Africa
Central and South America
Eastern Europe & Russia

Western Europe
Asia
Western Europe
Western Europe
Western Europe
Western Europe
Central and South America
Financial Centers
Central and South America
Asia
Eastern Europe & Russia
Western Europe
Asia
Asia
Western Europe
Financial Centers
Middle East
Western Europe
Caribbean
Asia
Financial Centers
Middle East
Eastern Europe & Russia
Asia
Middle East
Eastern Europe & Russia
Middle East
Western Europe
Eastern Europe & Russia
Western Europe
Asia
Asia
Western Europe
Africa
North America
Eastern Europe & Russia
Western Europe
Asia
Africa
Western Europe
Australia & New Zealand

Central and South America

Western Europe
Middle East
Asia
Central and South America
Financial Centers
Caribbean
Central and South America
Central and South America
Asia
Eastern Europe & Russia
Western Europe
Middle East
Eastern Europe & Russia
Eastern Europe & Russia
Financial Centers
Financial Centers
Middle East
Asia
Eastern Europe & Russia
Eastern Europe & Russia
Africa
Western Europe
Caribbean
Caribbean
Western Europe
Western Europe
Asia
Asia
Caribbean
Africa
Western Europe
Eastern Europe & Russia
Eastern Europe & Russia
Middle East
Western Europe
North America
Central and South America
Asia
Asia

Other Markets 2007

Parameter
rf

Description

RP-

Total Risk Premium

Cost of Equity
(formula)
Cost of Equity
Debt (pretax)
After-tax Cost of debt
Debt
Equity
D/E ratio

Reference
US 30-year treasury bond

Risk-free rate of return

levered
unlevered

SE

Beta; investment or sectorspecific risk for correlation to the

market
Equity Risk premium
Country Risk Premium

4.84%
3.36

Source
Bloomberg

= u * ( 1 + (1-t)*(d/e) )
Unlevered beta, power industry

Darmodaran

Total Risk Premium - Country Risk

Damodaran Datasets- Risk Premiums for

Other Markets, 2007

Indonesia country risk premium

Damodaran- as above

Ke = rf + L x (Risk Premium)

Damodaran
BI rate + margin for commercial bank

1.69
4.79%
4.50%
9.29%
Ke = rf + L x (Risk
Premium)
36.02%
11.50%
7.59%

After-tax cost of debt = Cost of debt *

(1-t)

60%
40%
1.50

Corporate Tax Rate

(t)

34.00%

WACC

18.96%

The standard debt to equity ratio in

developing countries

Indonesian Government Decree No.

49/1991, Joint Operation Contract (JOC)
d/(d+e)*(kd*(1-t)) + e/(d+e)*ke