Suppose Acme Industries correctly estimates its WACC at a given point in time and then...
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Suppose Acme Industries correctly estimates its WACC at a given point in time and then uses that same cost of capital to evaluate all projects for the next 10 years. With this assumption, what are the consequences for the following three questions 1) will the entire firm become more risky or less risky 2) will it drive WACC higher or lower and 3) will such consequence maximize the companys intrinsic value? Please provide detailed reasoning for your answers.
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