TimeValue Inc. has no retained earnings since it has always paid out all of its earnings as dividends. This same situation is expected to persist in the future. The company uses the CAPM to calculate its cost of equity, and its target capital structure consists of common stock, preferred stock, and debt. Which of the following events would be the least likely to change its WACC? O a) US government announced a higher income tax rate for companies. b) The company starts to invest in projects that have a relatively high correlation with the rest of the market. O c) Expected inflation decreases. O d) The firm adopts a new technology that reduce the fire hazard of one of its main factories in Thailand. O e) The market risk premium declines.

TimeValue Inc. has no retained earnings since it has always paid out all of its earnings as dividends. This same situation is expected to persist in the future. The company uses the CAPM to calculate its cost of equity, and its target capital structure consists of common stock, preferred stock, and debt. Which of the following events would be the least likely to change its WACC? a) US government announced a higher income tax rate for companies. b) The company starts to invest in projects that have a relatively high correlation with the rest of the market. c) Expected inflation decreases. d) The firm adopts a new technology that reduce the fire hazard of one of its main factories in Thailand. e) The market risk premium declines