On Cost of Capital (Calculating) * Statement I: The cost of new ordinary share is higher than the cost of common (ordinary) stock because of flotation costs involved in its sale. Statement II: There are three techniques for measuring the cost of common stock. They are the Gordon's growth model approach, the CAPM approach, and the bond plus approach. Statement III: The comparison of the MCC and the investment opportunity schedule (IOS helps determine the firm's optimal capital budget to be used in the capital budgeting process.

On Cost of Capital (Calculating) * Statement I: The cost of new ordinary share is higher than the cost of common (ordinary) stock because of flotation costs involved in its sale. Statement II: There are three techniques for measuring the cost of common stock. They are the Gordon's growth model approach, the CAPM approach, and the bond plus approach. Statement III: The comparison of the MCC and the investment opportunity schedule (IOS helps determine the firm's optimal capital budget to be used in the capital budgeting process.

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 1hM

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