Which of the following is not true about the cost of capital method of valuation?
A) It does not adjust the discount rate for risk as debt is repaid.
B) It requires the projection of future cash flows
C) It requires the projection of future debt-to-equity ratios.
D) It requires the calculation of a terminal value
E) None of the above

Question

Quizplus · Accepted Answer

The cost of capital method of valuation does adjust the discount rate for risk as debt is repaid, making option A not true.

Which of the Following Is Not True About the Cost