Estimating the cost of common equity using the discounted cash flow approach may be difficult to evaluate because
A)the dividend yield is extremely difficult to estimate.
B)the proper growth rate is difficult to establish.
C)the current price of the common equity is always changing making it difficult to determine.
D)all of the above are difficult to estimate.

Question

Quizplus · Accepted Answer

The proper growth rate is difficult to establish because it involves forecasting future growth, which can be uncertain and influenced by many factors.

Estimating the Cost of Common Equity Using the Discounted Cash