Choices

1- internal rate of return, discount rate

2- maximum return, hurdle rate

3- a direct, an inverse

1. The weighted average cost of capital Aa Aa 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: The weighted average cost of capital (WACC) is used in the capital budgeting project evaluation used in the calculation of a project's net present process either as the value (NPV) or the against which a project's internal rate of return (IRR) is maximum return compared In general, there is relationship between a firm's risk level and its weighted average cost of capital. True or False: A firm's weighted average cost of capital (WACC) reflects the composite cost of its debt, preferred stock, and common equity capital. False O True True or False: Because most firms tend to raise funds in large, lumpy amounts, their weighted average cost of capital should consist of the individual, after-tax cost of the particular source of funds used to finance an investment project. O True O False