A firm is considering a new project whose risk is greater than the risk of the firm's average project, based on all methexis for assessing risk. In evaluating this project, it would be reasonable foe management to do which Of the follow ing? Increase the estimated NPV of the project to relied its greater rvsk. Increase the cost of capital used to evaluate the project to relied its higher-than-average risk. Increase the estimated IRR of the project to reflect it greater risk. Reject flic project, since its acceptance would increase the firm's risk. Ignore the risk differential if the projected would amount to only a small fraction of the firm's total assets. Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows. The lower the WACC used to calculate it, the lower the calculated NPV will be. A project's NPV is found by compounding the cash inflows at the IRR to find the terminal value (TV), then discounting the TV at the WACC. The NPV of a relatively low-risk project should be found using a relatively high WACC. If a project's NPV is less than zero, then its IRR must be less than the WACC. If a project's NPV is greater than zero, then its IRR must be less than zero. Schalheim Sisters Inc. has always paid out all of its earnings as dividends, hence the firm has no retained earnings. This same situation is expected to persist in the future. The company uses the CAPM lo calculate its cost of equity, its target capital structure consists of common stock, preferred stock, and debt. Which o' the following events would REDUCE its WACC? Expected inflation increases. The company's beta increases. The market risk premium declines. The flotation costs associated with issuing preferred stock increase. The flotation costs associated with issuing new common stock increase