Required information Exercise 16-24 (Algo) Present value analysis-cost of capital LO 16-6 [The following information applies to the questions displayed below.] National Leasing is evaluating the cost of capital to use in its capital budgeting process. Over the recent past, the company has averaged a return on equity of 12.5% and a return on investment of 9.5%. The company can currently borrow short-term money for 6.5%. xercise 1624 (Algo) Part b Without prejudice to your answer to part a, identify why the company might choose to use a cost of capital of 13% to evaluate capital penditure opportunities. ote: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct iswer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark II be automatically graded as incorrect. A higher cost of capital might be used to recognize the risk associated with proposed capital expenditures. A higher cost of capital might be used for evaluating capital expenditure opportunities to provide for a margin of error in the estimates used in the capital budgeting calculations. A lower cost of capital might be used to recognize the risk associated with proposed capital expenditures. A lower cost of capital might be used for evaluating capital expenditure opportunities to provide for a margin of error in the estimates used in the capital budgeting calculations