Question: I could use some help with these practice questions for an upcoming quiz... 1) The Adjusted Net Present Value (APV) model is better to evaluate

I could use some help with these practice questions for an upcoming quiz...

1) The Adjusted Net Present Value (APV) model is better to evaluate a potential investment opportunity facing the firm than the traditional NPV model (discounting at WACC) because the APV model considers the valuation effects of financing the project with debt.Agree or disagree?Explain why.

2)If a firm decides to permanently increase its debt to asset ratio (leveraging up):

a.What would be the impact on the firm's WACC?Explain!

b.What would be the impact on the firm's asset beta?Explain!

3)Assuming the firm uses their WACC as the required return, what would be the impact on the NPV of the firm's potential investment opportunities?Explain!

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