Which of the Following Statements Is FALSE

question 16

Multiple Choice

Which of the following statements is FALSE?

• A)If the debt-equity ratio changes over time,the risk of equity-and,therefore,its cost of capital-will change as well.
• B)The FTE method can offer an advantage when calculating the value of equity for the entire firm,if the firm's capital structure is complex and the market values of other securities in the firm's capital structure are not known.
• C)The FTE approach does not have the same disadvantage associated with the APV approach.We don't need to compute the project's debt capacity to determine interest and net borrowing before we can make the capital budgeting decision.
• D)The WACC and APV methods compute the firm's enterprise value,so that a separate valuation of the other components of the firm's capital structure is needed to determine the value of equity.

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Definitions:

Methods

Functions or procedures associated with a class or object in object-oriented programming.

Catch Block

A section of code used to handle exceptions in a try-catch structure in programming languages like Java.

Exception

Refers to an event that disrupts the normal flow of a program's execution, typically arising from errors during the program's run time.

Calling Environment

The context or scope where a function or procedure is invoked or executed.