7. Factors that affect the cost of capital equation Aa Aa Each of the following factors affects the weighted average cost of capital (WACC) equation. which are factors that a firm cannot control? Check all that apply. The firm's capital structure The firm's dividend payout ratio Tax rates The firm's capital budgeting dedision rules The impact of a firm's cost of capital on managerial decisions Consider the following case: Acme Manufacturing Corporation has two divisions, L and H. Division L is the company's low-risk division and would have a weighted average cost of capital of% if it was operabed as an independent company. Division H is the company's high-risk division and would have a weighted average cost of capital of 15% if it was operated as an independent company. Because the two divisions are the same size, the company has a compasite weighted average cost of capital of 12%. Division L is considering a project with an expected retum of 10.5%. Should Acme Manufacturing Corporation accept or reject the project? O Rejedt the projed O Accept the project On what grounds do you base your accept-reject decision? O Division L's project should be accepted, because its retum is less than the risk-based cost of capital for the division. O Division L's project should be accepted, since its retum is greater than the risk-based cost of capital for the division