In March 2007, Hertz Pain Relievers bought a massage machine that generated a

Yield of 8%. It was financed through debt at a cost of 7%. In August

2010, Mr. Hertz said he wanted to buy a heating appliance that would have a performance

14% lie.

The CFO, Mr. Smith, told him that the project was not

Viable

Because the issuance of joint shares at a cost of 16% would be required to finance the com-

Pra. Ah!

Did the company adopt a logical touch when using its capital cost?