Which of the Following Statements Is FALSE

question 18

Multiple Choice

Which of the following statements is FALSE?

• A)Given a forecast of future interest payments,we can determine the interest tax shield and compute its present value by discounting it at a rate that corresponds to its risk.
• B)The total value of the unlevered firm exceeds the value of the firm with leverage due to the present value of the tax savings from debt.
• C)To compute the increase in the firm's total value associated with the interest tax shield,we need to forecast a firm's debt and its interest payments.
• D)There is an important tax advantage to the use of debt financing.

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Definitions:

Escalation Behavior

The phenomenon where individuals or groups continue to invest in a decision despite evidence of its ineffectiveness or failure.

Decision-Making Effectiveness

this defines how well a person or group can make choices that lead to the desired outcome efficiently and effectively.

Group-To-Individual Transfer

The process by which knowledge, skills, or attitudes developed within a group setting are adopted by individual members.

Plurality

Refers to the condition when no candidate or proposition in an election receives a majority of the votes, but one receives more than any other.