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Covid19 environment of higher interest rates

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Considering the U.S. economy is moving towards the post-COVID19 environment of higher interest rates (higher cost of debt), what effects of such a move would you expect to occur for:

1. Companies' capital stacks pivoting to more debt or more equity shares over the next 2-3 years?

2. Companies' overall WACC? Hint: consider the effect of higher interest rates on both debt and equity costs.

3. Companies' willingness to borrow funds (increase share of debt) to buy back shares (decrease share of equity)?

4. Companies' willingness to undertake highly risky, radical innovation-focused investments, generally associated with higher payoffs, but also much higher risks of failure?

Reference no: EM133116748

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