Factors that affect the WACC equation Each of the following factors affects the weighted average cost of capital (WACC) equation. Which are factors that a firm can control? Check all that apply. The firm's dividend payout ratio The firm's capital structure Interest rates in the economy Tax rates The impact of cost of capital on managerial decisions Consider the following case: Atton Co. has two divisions, L and H. Division L is the company's low-risk division and would have a WACC of 8% if it were operated as an independent company. Division H is the company's high-riskdivision and would have a WACC of 14% if it were operated as an independent company. Because thetwo divisions are the same size, the company has a composite WACC of 11%. Division L is consideringa project with an expected return of 9.5%. Should Atton Co. accept or reject the project? Accept Reject On what grounds do you base your accept-reject decision? Division L's project should be accepted, because its return is above the risk-based cost of capital for the division. Division L's project should be accepted, because its return is less than the risk-based cost of capital for the division