Question: Part II: Short Answer-2 questions (25%) Answer the question in the space allotted. Be specific, but concise. Partial credit will the given 1. The cost

Part II: Short Answer-2 questions (25%) Answer the question in the space allotted. Be specific, but concise. Partial credit will the given 1. The cost of capital a. What does the weighted average cost of capital (WACC) represent and how is R important to the value of a company? b. What are the components of WACC? Which ones can the managers control more directly? C. What decisions can management make in order to influence WACC and how should this impact firm value? 2. Capital budgeting What is capital budgeting and why is it important? a. What techniques are available to managers interested in evaluating a given project? b. How do project risk and the WACC come into play in the capital budgeting decision? C

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