Determine whether each of the factors in the following table is an internal fact

Question

Determine whether each of the factors in the following table is an internal factor or external factor, also indicate whether the factor leads to an increase, decrease or uncertain change in the firm's EACC (all else being equal)


External or Internal? Also does WACC Decrease, Increase or Uncertain?


The corporate tax rate increases

Investor risk aversion increases

The firm pays out more of its earnings as dividends

The Federal Reserve (FED) lowers interest rates

The firm increases its debt ratio

The firm stops risk adjusting the WACC on different projects.

Explanation / Answer

External, decrease External, Increase Internal, No Change/Uncertain External, Decrease Internal,Uncertain Internal, Increase

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