1)

Describe the three ways the cost of equity can be calculated. Which is likely to be more accurate than others?

2)

Factors that Affect the WACC says that stock prices affect company WACC.

If a company like Microsoft invests in a large number of risky, new business venture type investment project.

Why would the Rs of Microsoft, and Microsoft's WACC, increase?

3)

Consider a stable company which makes machinery. The company has had stablesales growth of a few percent per year for the last 10 years. It is planning some minor

changes to its products next year, as it has for many years. The company calculates the cash flows from this investment.

Should it discount the cash flows at WACC, a rate higher than WACC, or a rate lower than WACC? Why?