Assume that the risk-free rate increases

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Reference no: EM131566471

Assume that the risk-free rate increases, but the market risk premium remains constant. Please explain how, if any, this would impact the cost of debt and the cost of equity. Also, suppose a corporation estimates its WACC to be 11%. Explain why the WACC should not be used to evaluate all of its potential projects which are average-, high-, and low-risk projects.

Reference no: EM131566471

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