Which of the Following Is False

question 213

Multiple Choice

Which of the following is false?

• A) The WACC is equal to the firm's embedded debt cost times (1 - the tax rate).
• B) The WACC requires the cost of debt be decreased by (1 - the tax rate).
• C) The WACC is not directly observable in financial markets.
• D) The WACC is the required return on any investments a firm makes that have a level of risk equal to that of present operations.
• E) The WACC reflects the risk and target capital structure of a firm's existing assets as a whole.

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