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A high cost of capital is favorable to short term projects because the duration of project will decide the excess cost to be paid in interests and...

A high cost of capital is favorable to short term projects because the duration of project will decide the excess cost to be paid in interests and cost to equity. The long term projects require low cost of capital to be feasible, otherwise cash flows will not able to generate enough returns to service debt in initial phase of project, ehen generally projects have negative cash flows.

If the cost of capital declined, it would lead firms to invest more in long-term projects.

The IRR ranking do not change as WACC is applied the same across projects having same capital structure. Thus IRR ranking will not change in mutually exclusive projects

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