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Which of the following statements is/are true as per the Net Operating Income Approach?

Which of the following statements is/are true as per the Net Operating Income Approach?


I. Overall capitalization rate remains constant for all degrees of leverage.
II. Cost of equity remains constant for all degrees of leverage.
III. Cost of equity is a constant linear function of the debt-equity ratio.
IV. Cost of debt remains constant for all degrees of leverage.


[A]Only (III) above
[B]Only (IV) above
[C]Both (I) and (II) above
[D](I), (III) and (IV) above

Jan 01 2018 View more View Less

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