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Comment if you agree or disagree to the following statements: (8 marks) Statement 1: A firm that does not earn the cost of capital in

Comment if you agree or disagree to the following statements: (8 marks)

Statement 1: A firm that does not earn the cost of capital in the short run will probably be in bankruptcy.

Statement 2: The cost of capital, or WACC, is not the correct discount rate to use for all projects undertaken by a company

Statement 3: Firms in stable industries are advised to keep debt levels very low so that shareholders, rather than creditors, receive the benefits of steady cash flows.

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