1. What factors influence a company’s WACC?
2. Should the company use the overall, or composite, WACC as the hurdle rate for each of its division’s?
3. What procedures are used to determine the risk-adjusted cost of capital for a particular division? What approaches are used to measure a division’s beta?
4. What are three types of project risk? How is each type of risk used?
5. Explain in words why new common stock that is raised externally has a higher percentage cost than equity that is raised internally as retained earnings.