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, then the firm will most likely ___.

Respuesta :

Answer:

the firm will become more reasky as their Weighted-average cost-of-capital will change over time based on market condition but the management wil take project based on obsolete information

Thus, the WACC of the company will increase without the management notice this because, lender will use higher rate to make up for the change of failling Also, the shares wil trade at a lower value as is not maximizing the value of the firm.

Explanation: