Question: What effect would an increased cost of capital have on a firms future investments? Asbestos, once widely used in manufacturing and construction for its strength,

What effect would an increased have on a firm’s future investments?

Asbestos, once widely used in manufacturing and construction for its strength, durability, and resistance to heat and fire, remains the subject of lawsuits. Following the first asbestos- related lawsuit in 1966, hundreds of thousands of claims have been filed, forcing 73 companies into bankruptcy by mid- 2004. Asbestos liability looks to be one of the largest liabilities ever faced by U.S. businesses4 For the US. Insurance industry, asbestos-related losses could eventually reach as much as $65 billion. By the late 1990s, claims appeared to have stabilized, but then surged again.

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