Which One of These Statements Correctly Applies to an Unlevered

question 7

Multiple Choice

Which one of these statements correctly applies to an unlevered firm that pays no taxes?

• A) The return on equity exceeds the WACC.
• B) The return on assets equals the return on equity and also equals WACC.
• C) The return on assets equals the return on equity and exceeds WACC.
• D) The return on equity equals WACC and exceeds the return on assets.

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Definitions:

Wear and Tear

A theory suggesting that the body deteriorates gradually due to accumulated damage from environmental factors, stress, and the metabolic processes.

Antioxidants

Molecules that inhibit oxidation, a chemical reaction that can produce free radicals, potentially leading to cell damage.

Heart Disease

A term covering a range of conditions that affect the heart, such as coronary artery disease, heart attacks, congestive heart failure, and congenital heart defects.

Prospective Memory

Memory of things one has planned for the future.