If a Company Fails to Accurately Predict It's Cost of Equity

question 3

Multiple Choice

If a company fails to accurately predict it's cost of equity, then

• A)the firm's wacc will also be inaccurate.
• B)the firm may not be using the proper interest rate to estimate NPV.
• C)the firm my incorrectly accept or reject projects based on decisions made using the cost of capital computed with an incorrect cost of equity.
• D)All of the above are true.

---

Definitions:

Applied Research

Research aimed at solving practical problems and improving the human condition rather than acquiring knowledge for its own sake.

Basic Research

Investigative study aimed at gaining more comprehensive knowledge or understanding of the fundamental aspects of phenomena without specific applications towards processes or products in mind.

Specific Products

Items or goods that are distinctly identified or specified, often characterized by unique features or functions.

Basic Research

involves fundamental scientific exploration that aims to increase our understanding of certain phenomena or behaviors without seeking immediate practical applications.