1. Which of the following is NOT a capital component when calculating the WACC?
long-term debt
accounts payable
preferred stock
retained earnings
2. If a typical company uses the same cost of capital to evaluate all projects, what will happen?
The firm will likely become less risky over time, and its intrinsic value will not be maximized.
The firm will likely become less risky over time, and its intrinsic value will be maximized.
The firm will likely become riskier over time, but its intrinsic value will be maximized.
The firm will likely become riskier over time, and its intrinsic value will not be maximized.