Which of the Following Statements Is TRUE

question 27

Multiple Choice

Which of the following statements is TRUE?

• A)Issuing equity automatically hurts existing shareholders.
• B)Equity is less expensive than debt because of the dividend tax shield found with equity.
• C)If a firm takes on a positive NPV project financed with new equity,existing shareholders will benefit.
• D)All of the above are true.

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Definitions:

Future Event

An occurrence or situation that is expected to happen at a future date, often considered in planning and forecasting.

Past Event

A situation or occurrence that has already taken place.

Relevant

Pertaining to decision-making, it refers to information or costs that will change as a result of a decision, thereby affecting the outcome.

Total Cost

The sum of all expenses associated with the production or provision of goods and services, including fixed and variable costs.