Which of the Following Statements Is Incorrect Concerning the Equity

question 90

Multiple Choice

Which of the following statements is incorrect concerning the equity component of the WACC?

• A)the value of retained earnings is not included.
• B)market values should be used in the calculations.
• C)preferred equity has a separate component.
• D)there is a tax shield such as with debt.

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Definitions:

Necessarily Follows

A logical condition where the conclusion is an inevitable result of the premises; if the premises are true, then the conclusion cannot be false.

Inductive

A method of reasoning in which the premises are viewed as supplying strong evidence for the truth of the conclusion.

Harmful Outcomes

Negative results or consequences that arise from a particular action or set of circumstances.

Beneficial Outcomes

Results or consequences that provide advantages or promote well-being.