The cost of capital is a dynamic concept affected by different economic and firm-specific conditions. That is why the company accepting any project has a risk even if the WMCC schedule demonstrates the benefits of this project.
There are business and financial risks for the firm. As for the business risk, it may be difficult for the firm to compensate for all operating costs but it is usually unchanged. It means that the ability of the firm to compensate operating costs does not influence the acceptance of a particular project. The financial risk is the inability of the firm to compensate the required financial obligations (preferred stock dividends, interest, and lease payments), which are considered to be unchanged. This assumption presupposes that projects are financed in such a way that the firm’s ability to cover required financial obligations remains unchanged.
Generally speaking, the firm takes all risks into account, accepting new projects. It seems that business risks, as well as financial ones, are excluded. Nevertheless, it is impossible to totally control the market conditions that is why the number of returns is impossible to count in all details. The firms based their decisions on WMCC schedule, and IOS do not lose their money. From the above said, we may conclude that the WMCC concept is very important in the process of decision-making. Firms should not ignore it and take into account the point of equality of WMCC and IOS accepting new projects.