Multiple choice, please select the best answer following the 3 questions

When computing the weighted average cost of capital, which of these are adjusted for taxes?

cost of debt

both the cost of equity and the cost of preferred stockcost of preferred stockthe costs of all forms of financingcost of equity

A firms WACC can be correctly used to discount the expected cash flows of a new project when that project: will be managed by the firms current managers. will be financed with the same proportions of debt and equity as those currently used by the overall firm. will be financed solely with new debt and internal equity. will be financed solely with internal equity. has the same level of risk as the firms current operations.

An independent investment is acceptable if the profitability index (PI) of the investment is: greater than the internal rate of return. less than one. greater than a pre-specified rate of return. greater than one. less than the internal rate of return.