All of the following statements are correct except:
A)Relevant cash flows are incremental before-tax cash flows,which must be discounted using an incremental after-tax cost of capital.
B)The firm's relevant cost of capital is computed from before-tax financing costs.
C)A project's incremental cash flows must be discounted at a cost of capital that represents the historical cost to the firm of financing the project.
D)In estimating the cost of capital,the firm's analysts need to evaluate investors' historical returns under past market conditions and then use these past returns to compute the firm's cost of raising funds.
E)None of the above statements are correct.

Question

Quizplus · Accepted Answer

The Answer of All of the following statements are correct except:
A)Relevant cash flows are incremental before-tax cash flows,which must be discounted using an incremental after-tax cost of capital.
B)The firm's relevant cost of capital is computed from before-tax financing costs.
C)A project's incremental cash flows must be discounted at a cost of capital that represents the historical cost to the firm of financing the project.
D)In estimating the cost of capital,the firm's analysts need to evaluate investors' historical returns under past market conditions and then use these past returns to compute the firm's cost of raising funds.
E)None of the above statements are correct.

All of the Following Statements Are Correct Except