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

question 13

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 may 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.

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Definitions:

O-Horizon

The uppermost layer of soil, primarily composed of organic matter, including decomposed leaves, twigs, and other plant material.

Arid Climate

A dry climate with very little precipitation, insufficient to sustain much plant life, typically found in desert regions.

Slope Failures

A general term for various types of mass wasting or landslides that occur when a slope becomes unstable and collapses.

Rate of Movement

The speed at which a certain object or substance moves through space or a medium.