Which of the Following Statements Is FALSE

question 5

Multiple Choice

Which of the following statements is FALSE?

• A) As the firm borrows at the low cost of capital for debt, its equity cost of capital rises, but the net effect is that the firm's WACC is unchanged.
• B) With perfect capital markets, a firm's WACC is dependent on its capital structure and is equal to its equity cost of capital only if the firm is unlevered.
• C) Although debt has a lower cost of capital than equity, leverage does not lower a firm's WACC.
• D) With no debt, the WACC is equal to the unlevered equity cost of capital.

---

Definitions:

Adaptations

Adaptations are traits or behaviors that have evolved over time to allow an organism to better survive in its environment.

Radial Cleavage

A type of embryonic development in some animals where cell divisions occur parallel or perpendicular to the vertical axis of the embryo, contributing to its radial symmetry.

Deuterostomes

Animals characterized by the development of the anus from the first opening in the embryo, with the mouth forming later, including vertebrates and some invertebrates.

Protostomes

A group of animals characterized by developing the mouth before the anus during embryonic development, includes mollusks and arthropods.