Which of the following are often viewed as disadvantages of the adjusted present value method?
A) Ignores the effects of leverage on the discount rate as debt is repaid
B) Requires estimation of the cost and probability of financial distress
C) It is unclear how to define the proper discount rate
D) A and B only
E) A, B, and C

Question

Quizplus · Accepted Answer

All three options - A) ignoring the effects of leverage on the discount rate as debt is repaid, B) requiring estimation of the cost and probability of financial distress, and C) ambiguity in defining the proper discount rate - are often viewed as disadvantages of the adjusted present value method.

Which of the Following Are Often Viewed as Disadvantages of the Adjusted