Microsoft The section of Microsoft’s Form 10-K relating to management’s discussion and analysis provides detail as to factors that might affect Microsoft’s future and, as a result, the company’s long-term decisions. Review the financial statements and the “Management Discussion and Analysis” section in Microsoft’s most recent 10-K, and answer the following questions:

1. Microsoft has no long-term debt. Does that mean its cost of capital is zero? Explain.

2. Microsoft specifically states that the company “does not provide forecasts of future financial performance.” If that is the case, how can it make any capital budgeting decisions?