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.

Question

Quizplus · Accepted Answer

The Answer of 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.

Which of the Following Statements Is Most Correct