me required rate of return of an investor is the rate of return that an investor demands to purchase a firm's stocks or bonds and thus provide funds for capital investment. Therefore, required retums from the investors point of view correspond to the required returns or the weighted average cost of capital (WACC) from the firm's point of view. Indicate in the following table whether each of the statements about WACC and the required rates of return of investors is true or false. Statement True False Flotation costs increase the cost of newly issued stock compared to the cost of the firm's existing, or already outstanding common stock or retained earnings. A firm will increase in value if it invests in projects based on a WACC that is lower than the investors' required rate of return. The firm's cost of debt is what an investor is willing to pay for the firm's bonds before considering the cost of issuing the debt. The difference between the cost of retained earnings and the cost of new common equity is the cost to issue the new common stock