Which of the Following Statements Is Most Correct

question 33

Multiple Choice

Which of the following statements is most correct?

• A) Although some methods of estimating the cost of equity capital encounter severe difficulties, the CAPM is a simple and reliable model that provides great accuracy and consistency in estimating the cost of equity capital.
• B) The DCF model is preferred over other models to estimate the cost of equity because of the ease with which a firm's growth rate is obtained.
• C) The bond-yield-plus-risk-premium approach to estimating the cost of equity is not always accurate but its advantages are that it is a standardized and objective model.
• D) Depreciation-generated funds are an additional source of capital and, in fact, represent the largest single source of funds for some firms.
• E) None of the statements above is correct.

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Definitions:

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Manhattan Project

The code name for the U.S.-led research during World War II that developed the first nuclear weapons.

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