Which of the following descriptions of the component costs of capital

Which of the following descriptions of the component costs of capital is INCORRECT?

A) The cost of preferred shares, Kp, is estimated as the current dividend yield on any existing preferred shares or shares of similar firms.
B) The cost of debt, Kd, is estimated as the after-tax cost of issuing new debt (such as bonds) today.
C) The cost of debt is estimated using the CAPM as the risk-free rate or long-term government bond yield plus beta times a market risk premium.
D) All of the above are correct.

ANSWER

C