Question: 12.5 If two mutually exclusive projects were being compared, would a high cost of capital favour the longer-term or the shorter-term project? Why? If the

12.5 If two mutually exclusive projects were being compared, would a high cost of capital favour the longer-term or the shorter-term project? Why?

If the cost of capital declined, would that lead firms to invest more in longer-term projects or shorter-term projects? Would a decline (or an increase) in the WACC cause changes in the IRR ranking of mutually exclusive projects? Explain.

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