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Which of the following statements is incorrect? Group of answer choices Left-hand side of the accounting...

Which of the following statements is incorrect?

Group of answer choices

Left-hand side of the accounting balance sheet shows the book value of the firm’s assets, based on historical costs.

All the answers are correct except one.

The difference between the expected return on the market and the risk-free rate is known as the market risk premium.

Current cost of long-term debt is the appropriate cost of debt for WACC calculations.

The best method to use when estimating risk-free interest rate is the weighted average cost of capital approach.

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Answer #1

Ans- Option E- The best method to use when estimating risk-free interest rate is the weighted average cost of capital approach

As WACC is used to compute the Cost of Capital of firm which takes Cost of Debt, Cost of Preferred Stock & Cost of Equity with there respective capital weight structure. The above three cost carry sufficient amount of risk which means that Cost of Capital have appropriate portion of risk.

Thus WACC is not the method to estimate risk-free interest as WACC does not have risk free cost portion in it.

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