Look at the discounted dividend model. Section 10-8, "Factors that Affect the WACC" says that stock prices affect company WACC. If a company like Google invests in a large number of risky, new business venture type investment projects, why would the Rs of Google, and Google's WACC, increase? Now, consider a stable company which makes machinery. The company has had stable sales growth of a few percent per year for the last 10 years. It is planning some minor changes to its products next year, as it has for many years. The company calculates the cash flows from this investment. Should it discount the cash flows at WACC, a rate higher than WACC, or a rate lower than WACC? Why? Look at the discounted dividend model. Section 10-8, "Factors that Affect the WACC" says that stock prices affect company WACC. If a company like Google invests in a large number of risky, new business venture type investment projects, why would the Rs of Google, and Google's WACC, increase? Now, consider a stable company which makes machinery. The company has had stable sales growth of a few percent per year for the last 10 years. It is planning some minor changes to its products next year, as it has for many years. The company calculates the cash flows from this investment. Should it discount the cash flows at WACC, a rate higher than WACC, or a rate lower than WACC? Why