Which of the Following Statements Is Incorrect Concerning the Equity

question 35

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:

Accounting Information System

An Accounting Information System is a structured framework used to collect, store, manage, process, retrieve, and report financial data.

Cost Effective

This term refers to an approach or solution that provides the best possible outcome or value for the money spent, often used in evaluating projects or investments.

Cash Receipts Journal

A special journal that records all cash received.

Subsidiary Ledger

A detailed ledger that contains the breakdown of individual accounts, which supports the balances shown in the general ledger.