Suppose that the present values of the inflow from a project are greater than the cost of the investment. True or False: According to capital budgeting, the project will be funded. True False Read the following passage of text and answer the following question. You just learned that the present value of future cash flows from a project is a critical component in the capital budgeting decision of whether to fund a project or not. But what discount rate should be used to discount those future cash inflows from a project? Estimating this cost of capital is an important concept in finance. Firms typically estimate a weighted average cost of capital (WAAC) in order to use to discount future cash flows in the capital budgeting process. This WAAC weights the costs of various types of capital to arrive at a weighted average cost of capital. The weights used are based on the firm's target capital structure, rather than the present capital structure, when taking on new projects. When raising capital from investors, there are three major categories (or components) from which a firm can draw: debt, common stock, and preferred stock. The component cost represents the cost of that component. These component costs are the costs used in the estimation of the WAAC. True or False: The current capital structure, not the target capital structure, is used when calculating the WAAC during the capital budgeting process. True False