Which of the Following Statements Is FALSE

question 70

Multiple Choice

Which of the following statements is FALSE?

• A)Rather than set debt according to a target debt-equity ratio or interest coverage level,a firm may adjust its debt according to a fixed schedule that is known in advance.
• B)When we relax the assumption of a constant debt-equity ratio,the equity cost of capital and WACC for a project will change over time as the debt-equity ratio changes.
• C)When we relax the assumption of a constant debt-equity ratio,the APV and FTE methods are difficult to implement.
• D)If a firm is using leverage to shield income from corporate taxes,then it will adjust its debt level so that its interest expenses grow with its earnings.

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Definitions:

Phenomenology

A philosophical approach that emphasizes the study of conscious experience from the first-person point of view.

Scientific Hypothesis

A proposed explanation for a phenomenon, which can be tested through experimentation and observation.

Empirically Tested

The process of verifying theories or hypotheses through direct observation and experiment, grounded in factual evidence and scientific method.

Variables

Are elements, traits, or conditions that can change or vary within an experiment or study, potentially influencing the results.