Which of the Following Statements Is Correct

question 41

Multiple Choice

Which of the following statements is correct?

• A)The cost of capital used to evaluate a project should be the cost of the specific type of financing used to fund that project, i.e., it is the after-tax cost of debt, if debt is to be used to finance the project, or the cost of equity, if the project will be financed with equity.
• B)The after-tax cost of debt that should be used as the component cost when calculating the WACC is the average after-tax cost of all of the firm's outstanding debt.
• C)The cost of equity is generally harder to measure than the cost of debt because there is no stated, contractual cost number on which to base the cost of equity.
• D)The bond-yield-plus-risk-premium approach is the most sophisticated and objective method for estimating a firm's cost of equity capital.

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Definitions:

Politeness

The practice or quality of being polite, which involves showing consideration for others, demonstrating good manners, and respecting social norms.

Positive Emphasis

A focus or strategy that highlights the favorable or optimistic aspects of a situation, product, or argument.

Charity Event

A planned activity or event designed to raise funds and awareness for a cause or organization, often involving community participation.

Positive Emphasis

The strategy of focusing communication on positive elements to influence perception or behavior.