All of the Following Statements Are Correct Except

question 82

Multiple Choice

All of the following statements are correct except:

• A)The firm's optimum debt/equity mix maximizes 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 defines the firm's capital structure.
• C)A nonoptimal 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.
• E)All of the above statements are correct.

---

Definitions:

Maximum Count

The highest number of occurrences or values in a given set or series.

Ace of Spades

A specific playing card in a deck, often distinguished by a unique design and regarded as the highest card in the suit of spades.

Probability

A statistical measure quantifying the chance that an event will occur, evaluated as a value between 0 (never occurs) and 1 (always occurs).

Ace

The playing card with a single symbol on it, often considered the highest or lowest card in many card games.