Problem 1. Evaluating the potential market is an important part of the capital project analysis. If there is no market, the chances of success will be minimal so this is something that should be evaluated before any project is started. Do you agree with these remarks?
Problem 2. The WACC that should be used in capital budgeting is the firm's marginal, after-tax cost of capital. Why do you think this is a true statement?
Problem 3. If a typical U.S. company uses the same cost of capital to evaluate all projects, the firm will most likely become riskier over time, and its intrinsic value will not be maximized. Why do you think this is a correct statement?