As we delve further into assessing risk, we learn about a few more financial measures. Using our knowledge of risk mitigation, please answer the following:

What do we mean by a corporation's cost of capital and how does the Weighted Average Cost of Capital affect the discount rate a corporation uses to evaluate an investment?

What does perpetuity mean? Please describe a financial example of a perpetuity.

What would happen to a corporation stock if its actual return on investment was higher than its Weighted Average Cost of Capital? And what would happen to its stock if ROI was consistently lower than its WACC?

How would the discount rate used to evaluate a replacement or repair project, such as a leaky roof, be different from the discount rate for an investment in a new product or service? Why would the discount rates differ?