which one of the following is most apt to cause a wise manager to increase a project's cost of capital? assume the firm is levered. group of answer choices the project's life is shortened. she learns the project is riskier than previously believed. the aftertax cost of debt just decreased. management decides to issue new stock to finance the project. the initial cash outlay requirement is reduced.

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21-11-2022
Business

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which one of the following is most apt to cause a wise manager to increase a project's cost of capital? assume the firm is levered. group of answer choices the project's life is shortened. she learns the project is riskier than previously believed. the aftertax cost of debt just decreased. management decides to issue new stock to finance the project. the initial cash outlay requirement is reduced.

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Parrain Parrain · Answer 1 · 2022-11-25T16:49:03+01:00

An apt way for a wise manager to increase a project's cost of capital is that, assuming the firm is levered, She learns the project is riskier than previously believed.

How to increase cost of capital?

The cost of capital for a project is the interest rate on debt that will have to be paid on the loans borrowed for the project, or the dividend yield that will have to be paid to the shareholders of the company if stock is used instead. If the firm is levered, then it means that the firm borrowed money to fund the project and if that happens, a wise manager can aptly increase the project cost of capital by looking at the risk of the project.

When a project is riskier than previously thought, it means that the returns on it have to be greater to compensate for that risk. If the project is riskier therefore, the project cost of capital must rise to compensate for the risk being taken with the funds that were borrowed to find the project.

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