Which of the Following Statements Is FALSE

question 30

Multiple Choice

Which of the following statements is FALSE?

• A)The project's free cash flow to equity shows the expected amount of additional cash the firm will have available to pay dividends (or conduct share repurchases)each year.
• B)The value of the project's FCFE should be identical to the NPV computed using the WACC and APV methods.
• C)The value of the project's FCFE represents the gain to shareholders from the project.
• D)Because interest payments are deducted before taxes,we adjust the firm's FCF by their before-tax cost.

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Definitions:

Investment Opportunity

A potential venture or avenue through which an investor can put money into assets or projects expecting a favorable financial return.

Combined Return On Investment

A measure assessing the total financial return of different investments or the aggregate performance of an entire investment portfolio.

Contribution Margin Ratio

A financial metric that shows the percentage of sales revenue that exceeds variable costs, contributing to covering fixed costs and generating profit.

Residual Income

The net income that exceeds the minimum required return on investment or capital; often used as a performance measure in managerial accounting.