Each of the following factors affects the weighted average cost of capital $($WACC$)$ equation. Which of the following factors are outside a firm'sNational Petroleum Reliners Corporation $($NPR$)$ has two divisions, L and H$.$ Division L is the company's low$-$risk division and would have a

weighted average cost of capital of $8\%$ if it was operated as an independent company. Division $H$ is the company's high$-$risk division and

would have a weighted average cost of capital of $14\%$ if it was operated as an independent company. Because the two divisions are the

same size, the company has a composite weighted average cost of capital of $11\%.$ Division $H$ is considering a project with an expected

return of $12\%.$

Should National Petroleum Refiners Corporation $($NPR$)$ accept or reject the project?

Accept the project

Reject the project

On what grounds do you base your accept$-$reject decision?

Division H$\text{'}$s project should be accepted, as its return is greater than the risk$-$based cost of capital for the division.

Division $H^{\text{'}}$ s project should be rejected since its return is less than the risk$-$based cost of capital for the division.

control? Check all that apply.

The general level of stock prices

The effect of the tax rate on the cost of debt in the weighted average cost of capital equation

The firm's capital structure