Explore BrainMass
Share

Explore BrainMass

    Capital Project Analysis, Market, WACC, Cost of Capital

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1. Evaluating the potential market is an important part of the capital project analysis. If there is no market, the chances of success will be minimal so this is something that should be evaluated before any project is started. Do you agree with these remarks?
    2. The WACC that should be used in capital budgeting is the firm's marginal, after-tax cost of capital. Why do you think this is a true statement?
    3. if a typical U.S. company uses the same cost of capital to evaluate all projects, the firm will most likely become riskier over time, and its intrinsic value will not be maximized. Why do you think this is a correct statement?

    © BrainMass Inc. brainmass.com October 10, 2019, 8:10 am ad1c9bdddf
    https://brainmass.com/business/international-finance/capital-project-analysis-market-wacc-cost-capital-611529

    Solution Preview

    http://www.investopedia.com/terms/c/costofcapital.asp

    1. Evaluating the potential market is an important part of the capital project analysis. If there is no market, the chances of success will be minimal so this is something that should be evaluated before any project is started. Do you agree with these remarks?

    Yes, because the capital project requires the appropriation of a significant amount of resources, which requires a guaranteed market to exist to justify this amount of funds being ...

    Solution Summary

    capital project analysis

    $2.19