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Which of the following should be considered an error when estimating the cost of capital? Select one: a. Using the current yield-to-maturity on a firm's
Which of the following should be considered an error when estimating the cost of capital? Select one: a. Using the current yield-to-maturity on a firm's existing debt as the pre-tax cost of debt. b. Estimating the market risk premium for the CAPM method, using historical average return on stocks in conjunction with the current return on T-bonds. c. Using the market value of capital structure to obtain weights when estimating the capital structure when book value weights are available. d. Excluding funds which do not come from investors (such as wages payable) when calculating the cost of capital. e. All of the above
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