2. The weighted a cost of capital Aa The importance of knowing a firm's cost of capital Warm Duck is considering Investing in a project whose risk is greater than the firm's current risk level based on any method for assessing risk. Which of the following should management do when evaluating this project? O To take the higher risk level into account, they will need to use a discount rate that is greater than the capital to evaluate the project. To take the higher risk level into account, they will need to increase the flotation expenses associ project. O To take the higher risk level into account, they will need to change the weights on the capital compo They should always reject the project, because it will increase the firm's risk level. Which of the following statements is correct? O A firm's weighted average cost of capitalshould decrease if its tax rate increases, but the yield to maturity of its noncallable bonds remains the same and all other factors are held constant. O The market value of a firm's debt and equity will continuously change throughout the day, but the book valde of debt and equity tends to stay more stable over time. Consequently, the firm should use the book-value weight to define its optimal capital structure. O If a firm wants to lower its cost of debt, it can simply issue debt with a lower coupon rate