Which of the following statements is NOT correct? (why is C the correct answer?)

a)When estimating the risk premium for the CAPM approach, dont subtract the current long-term T-bond rate from the historical average return on common stocks.

b) When estimating the cost of debt, dont use the coupon rate on existing debt. Use the current interest rate on new debt.

c) When estimating the risk premium for the CAPM approach, dont subtract the current long-term T-bond rate from the historical average return on common stocks.

c) Use the target capital structure to determine the weights. If you dont know the target weights, then use the current book value of equity in the balance sheet, and never use the market value of equity.

d) Capital components are sources of funding that come from investors. Accounts payable, accruals, and deferred taxes are not sources of funding that come from investors, so they are not included in the calculation of the WACC.