Question

which of the following is correct ? Group of answer choices The market value of the...

which of the following is correct ?

Group of answer choices

The market value of the debentures is not affecting the calculation of the WACC

Tax-adjustment is required to calculate the cost of ordinary and preference share capital

The cost of equity under the dividend growth model and the CAPM may or may not be equal in practice

The cost of equity is always higher than the WACC of the company

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Answer #1

The cost of equity share capital which has been calculated under dividend discounting model and Capital Asset pricing model may or may not be equal in practice because they both have been calculated under taking different assumption and believes because dividend discount model only believes in dividend whereas Capital Asset pricing model discount for systematic risk.

All the other options are false.

Correct answer will be options (C) the cost of equity under the dividend discounting growth model and Capital Asset pricing mode may or may not be equal in practice.

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