Other things being constant, an increase in the cost of capital will result in a(an)

increase in a normal projects payback period.

decrease in a normal projects NPV.

increase in normal projects NPV.

decrease in a normal projects IRR.

Which of the following statements is most correct regarding a normal projects NPV if the projects payback period is 5 years while its economic life is also 5 years, assuming a positive WACC?

NPV must be positive.

NPV must be zero.

NPV must be negative.

What is major benefit when a company deducts its debt interest payments from its before-tax earnings?

Tax savings.

There are no benefits.

Tax liability increases.

After-tax earnings increase.

Other things being equal, a companys WACC will most likely _________ when the company pays more preferred stock dividends.

stay the same

increase

decrease