Explain how the Federal Reserve Bank’s (Fed) decision to raise interest rates would be expected to affect each component of the Weighted Average Cost of Capital (WACC).

Explain how the Federal Reserve Bank’s (Fed) decision to raise interest rates would be expected to affect each component of the Weighted Average Cost of Capital (WACC). What four mistakes are commonly made when estimating the WACC, and how do these mistakes arise? If the Fed decides to increase the interest rates significantly, how would that impact your capital budgeting decision?