New investment projects can enhance corporate-level strategies and can improve the firm future profitability. Explore how using different levels of debt can reduce WACC but eventually as we add more debt it will increase financial risk, using the Wacc data from fill in the blank cells below.

WACC components for Advance Auto Parts are:

Kd = 4.11% Ks = 8.7% Tax rate = 36.6%

And the percentage of Kd and Ks are:

% of Kd = 0.244% % of Ks = 81.6%

WACC using 20. 30, 50, and 70% of debt.	Actual WACC with 10, 20, 30, and 40% of tax rate.	Actual WACC adding 200, 400, 600 Basis Points to the actual Kd.	Identify how these different calculations can affect the firm value

Identify the relationship between the capital structure and firm strategy.