Ask Question
17 September, 19:57

The text identifies three methods for estimating the cost of common stock from retained earnings: the CAPM method, the DCF method, and the bond-yield-plus-risk-premium method. Since we cannot be sure that the estimate obtained with any of these methods is correct, it is often appropriate to use all three methods, then consider all three estimates, and end up using a judgmental estimate when calculating the WACC. A. True B. False

+3
Answers (1)
  1. 17 September, 21:16
    0
    A. True

    Explanation:

    This is true, the estimate we get of the cost of common stock from retained earnings is not fully accurate. So we often use all three methods and then average out to use a reasonable estimate.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The text identifies three methods for estimating the cost of common stock from retained earnings: the CAPM method, the DCF method, and the ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers