7. Chapter MC, Section 10, Problem 059 Which of the following statements is CORRECT? O a. The DOF model is generally preferred by academics and financial executives over other models for estimating the cost of because accurate estimates for its key inguts, the dividend yield and the growth rate, are easy to obtain uity. This is because of the DCF model's logical appeal and also b. Surveys indicate that the CAP is the most widely used method for estimating the cost of equity. However, other methods are also used because CAP estimates may be subject to error, and people like to use different methods as checks on one another. If all of the methods produce similar results, this increases the decision maker's confidence in the estimated cost of equity O c. The DCF model is preferred by academics and finance practitioners over other cost of capital models because it correctly recognizes that the expected return on a stock consists of a dividend yield plus an expected capital gains yield d. 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 is y outs the risk free rate, and the market risk premium--can be estimated with little error The bond yield-plus -premium approach to estimating the cost of city may not ways be premium can be found by using standarded and objective procedures curate, but has the advantage that two key inputs, the firm's own cost of debt and its risk