Which of the Following Statements Is FALSE

question 41

Multiple Choice

Which of the following statements is FALSE?

• A)When we relax the assumption of a constant debt-equity ratio,the FTE method is relatively straightforward to use and is therefore the preferred method with alternative leverage policies.
• B)When debt levels are set according to a fixed schedule,we can discount the predetermined interest tax shields using the debt cost of capital,rD.
• C)With a constant interest coverage policy,the value of the interest tax shield is proportional to the project's unlevered value.
• D)When the firm keeps its interest payments to a target fraction of its FCF,we say it has a constant interest coverage ratio.

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Definitions:

Objective Methods

Research or assessment techniques that aim to minimize bias and subjectivity, providing measurable and observable data.

Rational Self-Control

The ability to regulate one's emotions, thoughts, and behaviors in a way that is consistent with long-term goals and societal norms.

Libido

A term used in psychoanalytic theory to describe the energy created by sexual instincts and desire.

Superego

A component of Sigmund Freud's psychoanalytic theory, representing the moral conscience and ideals of society in the individual's personality.