Which one of the following statements is true about calculating a WACC?

a. When using the DCF model to calculate the required rate of return on equity, g used in the calculation should be the expected growth rate in the S&P 500.

b. When using the CAPM to calculate the required return on common stock, a market risk premium equal to the risk-free rate divided by the most recent year's average return on the S&P 500 should be used.

c. In a rising interest rate environment, the book value of long-term debt will tend to be greater than its market value.

d. If flotation costs are ignored, then the calculated WACC will be too high and profitable projects will be overlooked.

e. The book value of equity can be used when calculating the capital structure weights as long as it is adjusted for the average premium or discount of the long-term bond prices.

Please explain why the correct answer is right