Which of the Following Statements Is FALSE

question 51

Multiple Choice

Which of the following statements is FALSE?

• A)In the real world,specific projects should differ only slightly from the average investment made by the firm.
• B)We can estimate rU for a new project by looking at single-division firms that have similar business risks.
• C)The project's equity cost of capital depends on its unlevered cost of capital,rU,and the debt-equity ratio of the incremental financing that will be put in place to support the project.
• D)Projects may vary in the amount of leverage they will support-for example,acquisitions of real estate or capital equipment are often highly levered,whereas investments in intellectual property are not.

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Definitions:

Tropical Cyclones

Powerful storm systems characterized by a low-pressure center, strong winds, and heavy rain, forming over warm tropical oceans.

Hurricane

A tropical cyclone with wind speeds of 74 miles per hour or greater that occurs especially in the western Atlantic, affecting coastal areas with heavy rain and destructive winds.

Typhoon

A tropical cyclone occurring in the western part of the North Pacific Ocean, characterized by strong winds, heavy rain, and storm surges.