Back to A met Attempts: I D Average: 23 7. Factors that affect the cost of capital equation Each of the following factors affects the weighted average cost of capital (WACC) ecuation which are factors that afman contre apply. rec h The firm's dividend payout ratio Tax rates The firm's capital budgeting decision rules The general level of stock prices The impact of a firm's cost of capital on managerial decisions Consider the following case Anderson Animations Corporation has two divisions, and vision L is the company's ow-risk division and would have a weighted average cost of capital of 8% it was operated as an independent company, Division is the company's high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division Lis considering a project with an expected return of 9.5% Should Anderson Animations Corporation accept or reject the project? Accept the project Reject the project on what grounds do you base your accept-reject decision ess than the risk-based cost of capital for the division Division L's project should be accepted, because MacBook Pro