1.1 Project: SuperTread Tire BrandABC Tires has recently developed a new tire, The Supertread. Executives and financial directors (Mr. George Lee) must determine whether it is beneficial for the company to make the investments necessary for its production and marketing. A report was prepared analyzing Mr Lee's concerns regarding the company's proposed new project. 1.2 Financial decisions within ABC Investment decisions have major consequences on the future development of a company, in this case ABC Tyres. Evaluating a project in the face of uncertainty can be an extremely complex task. Uncertain future events that could affect the entire economy, a company or a project, lead to variable cash flows, which have different values ​​than those projected with certainty, in a deterministic environment (Bruner et al, 1998 ). Given the huge annual expenditures on capital projects and business acquisitions, the careful choice of discount rates is of paramount importance for financial managers such as Mr Lee. Estimating the discount rate is always a reference in any valuation process. Cash flow assessment follows a specific pattern. All we need to do is focus only on the required inputs in the free cash flow model. Things get more complicated when evaluating discount rates because there are many valuation models, some of them are crude but heavily contested, and some of them are complex but not preferred by users (Brigham et al, 1990). The choice of a model to estimate the discount rate depends on the information available and Mr. Lee's reasons and preferences. 1.3 Market value weights versus book value weights When deciding whether to use market value weights or book value weights, Mr. Lee should be guided by the objective of the analysis . to decide which value is relevant and will lead to the most accurate results and decisions. In most cases, the weights to be assigned to different types of capital will be clearly different if Mr. Lee chooses to apply current market values ​​as opposed to the values ​​shown on Goodyear Tires' balance sheet. In this case, Mr. Lee wants to determine a “yardstick” against which to compare the expected returns on future investments for ABC tires (Rappaport et al, 2001). This is the most common use of the cost of capital and is why current market value weights should generally be used. Indeed, the cost of capital incorporates the expected returns of both creditors and shareholders, since both groups have claims to free cash flow..