Which of the Following Statements Is True Concerning Companies That

question 94

Multiple Choice

Which of the following statements is true concerning companies that do not pay dividends?

• A) The cost of equity capital can be estimated using the Capital Asset Pricing Model.
• B) The cost of equity capital is equal to the growth short-term rate of earnings per share.
• C) The dividend capitalization model can be used to determine an accurate cost of equity capital.
• D) None of these are correct

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Definitions:

Periodic Inventory System

An inventory management method where stock levels are updated at specific intervals through physical counts.

Average Cost Methods

An inventory costing method where the cost of goods sold and ending inventory are calculated based on the average cost of all units available for sale.

Inventory Cost

The total cost associated with purchasing and producing goods that a company has in stock and available for sale.

Perpetual Inventory System

An inventory management system that tracks real-time changes in inventory levels with each sale or purchase, facilitating continuous updating of stock records.