FM Unit 4 DB: Cost of Capital

write at least 500 words that respond to the following questions with

your thoughts, ideas, and comments. This will be the foundation for

future discussions by your classmates. Be substantive and clear, and use

examples to reinforce your ideas.

1. In the weighted average cost of capital formula, the after-tax cost
   of debt is used instead of the before-tax cost of debt. However, no such
   adjustment is made to the cost of equity. Are you surprised by this
   different tax handling of debt versus equity? Why or why not?
2. If a corporation borrowed all of the money for its project at
   the risk-free rate, does that mean that the project’s cost of capital is
   the risk-free rate?
3. When calculating the weighted average cost of capital, would it
   matter more if book values instead of market values were used for
   equity instead of debt? Please explain.

Be sure to document your posts with in-text citations, credible sources, and properly listed references.