The firm initiates a price decrease, their projection on the competitors' reaction is they will also decrease their price to level with them. Starting a price decrease will affect the whole market of like products. Also, another angle that they considered is they will be reprimanded by their regulatory board.
<span>As the volume of financing increases, the costs of the various types of financing will increase, raising the firms weighted average cost capital. This happens because the firm will have to pay more in fees for their financing an that will be passed on to the firms weighted average cost capital.</span>
