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  1. business
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  3. each of the following factors affects the weighted

Each of the following factors affects the weighted average cost of capital (WACC) equation. Which...

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Accounting

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Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm's control? Check all that apply. Tax rate The firm's capital structure The inflation rate Consider the following case: National Petroleum Refiners Corporation (NPR) has two divisions, L and H. Division L is the company's low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company's high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division H is considering a project with an expected return of 12%. Should National Petroleum Refiners Corporation (NPR) accept or reject the project? Reject the project Accept the project On what grounds do you base your accept-reject decision? Division H's project should be rejected since it return is less than the risk-based cost of capital for the division. Division H's project should be accepted, as its return is greater than the risk-based cost of capital for the division

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