Which of the Following Statements Concerning the Compressed Adjusted Present

question 31

Multiple Choice

Which of the following statements concerning the compressed adjusted present value (APV) model is NOT CORRECT?

• A) The value of a growing tax shield is greater than the value of a constant tax shield.
• B) For a given D/S, the levered cost of equity in the compressed APV model is greater than the levered cost of equity under MM's original (with tax) assumptions.
• C) For a given D/S, the WACC in the compressed APV model is greater than the WACC under MM's original (with tax) assumptions.
• D) The total value of the firm is independent of the amount of debt it uses.
• E) The tax shields should be discounted at the unlevered cost of equity.

---

Definitions:

Task Significance

The degree to which a job has a substantial impact on the lives or work of other people either within or outside the organization.

Job Enlargement

A human resource strategy where additional tasks of similar skill level are added to a worker's responsibilities to increase job diversity and employee motivation.

Job Enrichment

Enhancing a job by adding tasks that increase responsibility, autonomy, and opportunities to grow, improving employee satisfaction and performance.

Psychological State

The mental condition of an individual at a particular time, influenced by emotions, thoughts, and behavior patterns.