Which of the Following Statements Is FALSE

question 9

Multiple Choice

Which of the following statements is FALSE?

• A)When we relax the assumption of a constant debt-equity ratio,the FTE method is relatively straightforward to use and is therefore the preferred method with alternative leverage policies.
• B)When debt levels are set according to a fixed schedule,we can discount the predetermined interest tax shields using the debt cost of capital,r_D.
• C)With a constant interest coverage policy,the value of the interest tax shield is proportional to the project's unlevered value.
• D)When the firm keeps its interest payments to a target fraction of its FCF,we say it has a constant interest coverage ratio.

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Definitions:

Authority

The right or power assigned to an individual or organization to make decisions, give orders, and enforce obedience.

Traditional View

A perspective or approach that emphasizes historical precedence and the continuity of certain values, practices, and institutions over time.

Organizational Effectiveness

The capability of an organization to achieve its goals efficiently and effectively, maximizing resource utilization for the desired outcomes.

Societal Expectations

The standards and norms that society deems acceptable or desirable, influencing individual behavior and social interactions.