1. The cost of debt is 2%. The firms tax rate is 25 %.
2. The current price for preferred shares in the market is $150 and the perpetual annual dividend is $40.
3. Harry Morriss common shares are currently selling at $40 per share, its last dividend (D0) was $6, and dividends are expected to grow at a constant rate of 3 % in the foreseeable future.
4. Harry Morriss capital structure is 50 % long-term debt, 25 % preferred stock and 25 % common stock.

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1.Why does cost of capital play an important role in decision-making?

2. When it comes to the return on invested capital and cost of capital, when should a company accept or reject a project