Which of the following statements is CORRECT? Answer Although some methods used

Question

Which of the following statements is CORRECT?
Answer
Although some methods used to estimate the cost of equity are subject to severe limitations, the CAPM is a simple, straightforward, and reliable model that consistently produces accurate cost of equity
estimates. In particular, academics and corporate finance people generally agree that its key inputs--beta, the risk-free rate, and the market risk premium--can be estimated with little error.
The DCF model is generally preferred by academics and financial executives over other models for estimating the cost of equity. This is because of the DCF model

Explanation / Answer

DFC method is correct economically and all other aspects.

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