A company that has both debt and equity in its capital structure will use its weighted average cost of capital (WACC) as its discount rate. Based on your understanding of the weighted average cost of capital, complete the following statements: In general, the the risk of a firm as perceived by its existing and potential investors, the greater is the firm's weighted average cost of capital (WACC). The calculation of a firm's weighted average cost of capital should be based on the after-tax cost of the dollar of financial capital raised. It is generally believed that the proportions, or weights, used in the calculation of a firm's weighted average cost of capital should be based on the market values of the firm's capital sources. This is because the market value weighting system is more consistent with maximizing the value of the firm's True or False: Although firms tend to raise their capital in large, lumpy amounts, their weighted average cost of capital (WACC) and the capital investment that they are evaluating assume that the project will be financed with the same proportion of funds contained in their target capital structure. O False O True True or False: The weighted average cost of capital represents the maximum return that a firm should earn on new investments exhibiting the firm's average risk level. O True O False