Change in Cost of Capital Assume that the parent of Naperville Co. will use equity to finance a project in Switzerland, while the parent of Lombard Co. will rely on a dollar-denominated loan finance a project in Switzerland, and Addison Co. will rely on a Swiss franc-denominated loan to finance a project in Switzerland. The firms will arrange their financing in 1 month. This week, the U.S. risk-free long-term interest rate declined, but interest rates in Switzerland did not change. Do you think the estimated cost of capital for the projects by each of these three U.S.

firms increased, decreased, or remained unchanged?

Explain.