The cost of equity for a firm is:
A) determined by directly observing the rate of return required by equity investors.
B) based on estimates derived from financial models.
C) equivalent to a leveraged firm's cost of capital.
D) equal to the risk-free rate of return plus the market risk premium.
E) equal to the risk-free rate of return plus the dividend growth rate.
B
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Which of the following is not an application of accrual accounting?
A) Recognizing revenues when earned and expenses when incurred. B) Applying the matching rule. C) Adjusting the accounts. D) Recording on the basis of actual receipt and payment of cash.