State by using the words: increase, decrease and/or no-change, the effect that each scenario will have on a company's WACC? (No computation required) (3 marks) Increase in tax rate Increase in weight of debt (Wd) The company appoints a new Chief Executive Officer B) State one (1) advantage and one (1) disadvantage of CAPM. (2 marks) C) State two (2) circumstances under which it would be inappropriate for a company to use the WACC for its hurdle rate? (2 marks) D) You obtain the following information for Mayday Inc. After Tax Profits/Net Income (one year from now) Dividend Payout Ratio (DPR) Number of Shares Outstanding Current Share Price $30,000,000.00 10%- 1,000,000 $27.24 Expected Growth Rate 3% Expected Stock Market Return 9.5% Rate of Taxation 35% Using the DDM, what is the cost of Equity for Mayday Inc.? (3 marks) E) In capital budgeting, describe how the following items are treated in the project appraisal: > Product cannibalization (give 2 real life examples) > Depreciation > Interest charges (5 marks) F) You make a mistake in estimating the NPV of a project. You have discounted the net income rather than the cash flows to the project. Explain why accounting figures are inappropriate to use to calculate the NPV of a project. (5 marks)