Pick the best answer 11. A major disadvantage of the payback period is thatit a is useless as a risk indicator b. ignores cash flows beyond the payback period. e does not directly account for the time value of d. statements b and c are correct. e all of the statements above are correct. money 12. Which of the following statements is CORRECT? a. One defect of the IRR method is that it does not take account of cash flows over a project's full life. b. One defect of the IRR method is that it does not take c. One defect of the IRR method is that it does not take d. One defect of the IRR method is that it values a dollar account of the time value of money. account of the cost of capital. received today the same as a dollar that will not be received until sometime in the future. e. One defect of the IRR method is that it assumes that the cash flows to be received from a project can be reinvested at the IRR itself, and that assumption is often not valid. 13. Bosio Inc.'s perpetual preferred stock sells for $97.50 per shane and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC? a 8.72% b. 9.08% . 9.44% d. 9.82% e. 10.22% 14. Assume that you are a consultant to Broske Inc., and you have been provided with the following data: D S0.67; Po $27.50, and g 8.00% (constant). What is the cost of equity from retained earnings based on the DCF approach? a. 9.42% b. 9.91% c. 10.44% d. 10.96% e. 11.51%