Finance Homework : What role does the cost of capital play in the overall financial decision making of the firm’s top managers?

Subject: Business / Finance
Question
WACC #1

What role does the cost of capital play in the overall financial decision making of the firm’s top managers?

DEBT VS EQUITY #2

Why do you think debt offerings are more common than equity offerings and typically much larger as well?

Questions

1.

How do we traditionally define capital budgeting in finance?

2.

What is the purpose of capital budgeting in a business firm, and how is it used?

3.

How Navistar Determined their Cost of Capital?
4.

Navistar Trucking has adopted a new approach to capital budgeting. What is the fundamental way in which the new approach differs from the traditional approach?

5.

What is the goal of the new approach of capital budgeting?

6.

Under what circumstances would a business firm drop a project chosen through the new capital budgeting approach?