All of the Following Statements Are Correct, Except

question 33

Multiple Choice

All of the following statements are correct, except:

• A) The firm's optimum debt/equity mix minimizes the firm's cost of capital, which in turn helps the firm to maximize shareholder wealth
• B) A firm's mix of debt and equity used to finance its assets is not the firm's capital structure.
• C) A non-optimal capital structure with either too much or too little debt leads to higher financing costs, and the firm will likely reject some capital budgeting projects that could have increased shareholder wealth with an optimal financing mix.
• D) A project's NPV represents the increase in shareholders' wealth from undertaking a project; thus, a lower weighted average cost of capital gives higher project net present values and results in higher levels of shareholder wealth.

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Definitions:

Lymph

A clear fluid that circulates through the lymphatic system, carrying white blood cells and supporting the body's immune system.

Lipid Absorption

The process by which dietary fats are broken down and taken up into the bloodstream from the digestive tract.

Lymphatic System

A network of tissues and organs that help rid the body of toxins, waste, and other unwanted materials, primarily transporting lymph, a fluid containing infection-fighting white blood cells.

Erythrocytes

Red blood cells that carry oxygen from the lungs to the body tissues and carbon dioxide as a waste product away from tissues back to the lungs.