$17.91 $19.62 $22.23 Question 2 5 pts Which of the following statements is correct? O The cost of debt used to calculate the weighted average cost of capital is based on an average of the cost of debt already issued by the firm and the cost of new debt. One problem with the CAPM approach in estimating the cost of equity capital is that if a firm's stockholders are, in fact, not well diversified, beta may be a poor measure of the firm's true investment risk. The bond-yield-plus-risk-premium approach is the most sophisticated and objective method of estimating a firm's cost of equity capital. The cost of equity capital is generally easier to measure than the cost of debt, which varies daily with interest rates, or the cost of preferred stock since preferred stock is issued infrequently. Question 3 A company is considering a proposed new plant that would increase productive capacity. In calculating the project's operatin nur the firm should not deduct financing costs such as interest expense, because financing costs are accounted for by nach flows this would, in effect, "double count