Multiple choice

Which of the following is not an assumption of net income approach?

  1. No taxes

  2. The cost of debt is less than the cost of equity.

  3. Business risk remains constant at every level of debt equity mix.

  4. Risk perception of investors is not changed by the use of debt.

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 This is not an assumption of net income approach.

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