Which of the Following Statements Is FALSE

question 43

Multiple Choice

Which of the following statements is FALSE?

• A)Because the WACC incorporates the tax savings from debt,we can compute the levered value of an investment,which is its value including the benefit of interest tax shields given the firm's leverage policy,by discounting its future free cash flow using the WACC.
• B)The WACC incorporates the benefit of the interest tax shield by using the firm's before-tax cost of capital for debt.
• C)When the market risk of the project is similar to the average market risk of the firm's investments,then its cost of capital is equivalent to the cost of capital for a portfolio of all of the firm's securities;that is,the project's cost of capital is equal to the firm's weighted average cost of capital (WACC).
• D)A project's cost of capital depends on its risk.

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Definitions:

Native-born American Families

Native-born American families are those whose members were born in the United States, distinguishing them from families that have immigrated and became naturalized citizens.

Unemployment Rate

The percentage of the labor force that is jobless and actively looking for employment.

Rise in Suicides

An increase in the number of individuals intentionally causing their own death.

Percent

A part or other object per hundred, used to indicate a proportion out of one hundred in fractions or rates.