Which of the Following Statements Is FALSE

question 46

Multiple Choice

Which of the following statements is FALSE?

• A)To determine the benefit of leverage for the value of the firm,we must compute the present value of the stream of future interest tax shields the firm will receive.
• B)Because the cash flows of the levered firm are equal to the sum of the cash flows from the unlevered firm plus the interest tax shield,by the Law of One Price the same must be true for the present values of these cash flows.
• C)By increasing the amount paid to debt holders through interest payments,the amount of the pre-tax cash flows that must be paid as taxes increases.
• D)When a firm uses debt,the interest tax shield provides a corporate tax benefit each year.

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Definitions:

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The organ system that enables humans and animals to move using the muscular and skeletal systems, including bones, muscles, cartilage, tendons, ligaments, and joints.

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The scientific study of the mind and behavior, encompassing various aspects of conscious and unconscious experience as well as thought.

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A branch of physical science concerned with the composition, structure, properties, and changes of matter.