For this discussion, focus on the role of a company's cost of capital on capital budgeting decisions. In a recent study the NYU Stern School of Business, reported the average cost of capital for a company in the Recreational Vehicle was recently about 6.7%. So for every $1 raised through all sources of financing, an average company in that industry gives out (or pays) about 6.7 cents to its investors (i.e., bondholders, banks, common stockholders).

Lets say that Thor Industries (from Discussion #1) has a cost of capital similar to an average company in its industry. So we will assume the cost of capital is about 6.7% for Thor Industries. Keep in the mind the role of the cost of capital, how managers use that number and whether that number is changing for Thor Industries, Inc. Discuss in one or two paragraphs if you think the following potential capital projects would be undertaken (i.e., invested in) given by Thor Industries. Include why or why not the project should be undertaken, defining what the cost of capital number measures.

Technology Upgrades Project with projected Rate of Return of 5.8%; Modernizing of Several Manufacturing Plants Project with projected Rate of Return of 7.5%; and New Design Studies with projected Rate of Return of 8%.

Total of 18 points. Discussion of Cost of Capital meaning/use and Changes for Thor Inc. - 4 points, Accept/Reject decisions of Each Project and Reasons - 12 points, Organization and Grammar 2 points.