You have just calculated your firm's WACC. Your boss has asked you to do an NPV analysis of a potential new project, but you realise that the project is riskier than the firm's other projects. What should you do? Select one: a. Reject the project. b. Conduct the NPV analysis using the WACC as the discount rate. c. Conduct the NPV analysis using an appropriate discount rate, which will be higher than the firm's WACC. d. Conduct the NPV analysis using an appropriate discount rate, which will be lower than the firm's WACC.

Based on the Pure Expectations Theory, what would you expect to happen if long-term interest rates were greater than the geometric average of current and expected future short-term interest rates? Select one: a. Investors will sell long-term securities and buy short-term securities, pushing long-term rates up and short-term rates down. b. Investors will sell long-term securities and buy short-term securities, pushing long-term rates down and short-term rates up. c. Investors will buy long-term securities and sell short-term securities, pushing long-term rates down and short-term rates up. d. Investors will buy long-term securities and sell short-term securities, pushing long-term rates up and short-term rates down.

Firm ABC Ltd has debt valued at $16 million, ordinary shares valued at $30 million and preference shares valued at $6 million. The before-tax cost of debt is 2.9%, the cost of ordinary shares is 13.4% and the cost of preference shares is 6.6%. The tax rate is 25%. What is the firm's Weighted Average Cost of Capital? Select one: a. 7.04% b. 9.16% c. 9.38% d. 8.97%