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The correct answer is: A. i and a<\/strong><\/p>\n List I lists four items that are related to the cost of capital. List II lists four methods for estimating the cost of capital.<\/p>\n Item i, “Interest is a deductible expense,” is not related to any of the methods in List II. Interest is a tax-deductible expense, which means that it can be used to reduce a company’s taxable income. This can lower the company’s tax bill, which can increase the company’s after-tax return on investment.<\/p>\n Item a, “Cost of debt capital,” is the cost of borrowing money from lenders. This cost is typically expressed as an interest rate. The cost of debt capital is an important component of the overall cost of capital.<\/p>\n Item ii, “Realized Yield Approach,” is a method for estimating the cost of equity capital. This method uses the historical returns on a company’s stock to estimate the expected future returns on the stock.<\/p>\n Item iii, “Extended Yield Approach,” is a method for estimating the cost of equity capital. This method uses the expected future returns on a company’s stock to estimate the cost of equity capital.<\/p>\n Item iv, “Dividend Capitalization Approach,” is a method for estimating the cost of equity capital. This method uses the current dividend yield on a company’s stock to estimate the cost of equity capital.<\/p>\n The cost of equity capital is the return that investors expect to earn on their investment in a company’s stock. The cost of equity capital is an important component of the overall cost of capital.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”i and a” option2=”ii and b” option3=”iii and c” option4=”iv and d” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[700],"tags":[],"class_list":["post-33703","post","type-post","status-publish","format-standard","hentry","category-business-finance","no-featured-image-padding"],"yoast_head":"\n