A firm's capital structure and its overall cost of capital are affected by firm-specific factors as well as market, regulatory, and macro-economic conditions. You are asked to discuss the individual impact of six different scenarios (assuming everything else remains constant) on a firm's capital structure and its overall cost of capital. Please be specific and provide the theoretical rationale in support of your responses. You can use the space provided in the matrix below or use a separate sheet to answer the questions. Expected changes in the firm, capital markets, and regulation 1. Variance of cash flows is expected to increase. 2. The new U.S. tax policy has reduced the corporate tax rate. 3. Investment in facilities and other tangible assets are expected to increase. 4. Tax deductibility of interest payments on debt may be stopped by the U.S. Congress. 5. New international acquisitions are expected to reduce the firm's exposure to currency risk. 6. Securities and Exchange Commission (SEC) is expected to question the firm for possible misrepresentation of its annual reports.