Reference no: EM132038711

Which of the following statements is CORRECT?

a. One defect of the IRR method is that it does not take account of the time value of money.

b. One defect of the IRR method is that it does not take account of the cost of capital.

c. 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.

d. One defect of the IRR method is that it does not take account of cash flows over a project’s full life.

e. One defect of the IRR method is that it values a dollar received today the same as a dollar that will not be received until sometime in the future.

2. Which one of the following statements is false?

Beta is a measure of risk.

"Market risk premium” and “return on the market” are the same thing.

CAPM is an acronym for Capital Asset Pricing Model.

A disadvantage of using the dividend growth model to estimate the cost of equity is that it does not explicitly account for risk.

You should not use the coupon rate on outstanding debt as the cost of debt in WACC.