Week 6 discussion board forum has 3 questions associated with the course textbook chapters 10 and 11. Students are expected to post their answers by simply replying to the original question. The minimum word count is 150 for each answer.
TEXTBOOK: Brigham Fundamentals of Financial Management: Concise Edition 10e CM
- Assume that the risk-free rate increases, but the market risk premium remains constant. What impact would this have on the cost of debt? What impact would it have on the cost of equity?
- Suppose a firm estimates its WACC to be 10%. Should the WACC be used to evaluate all its potential projects, even if they vary in risk? Please explain.
- Would the WACC be different if the equity for the coming year came solely in the form of retained earnings versus some equity from the sale of new common stock? How might dividend policy affect the WACC? Please answer and explain both questions.
