Which of the Following Statements Is False

question 31

Multiple Choice

Which of the following statements is false?

• A) When a firm issues new shares that account for a significant percentage of its outstanding shares, the transaction is called a leveraged recapitalization.
• B) MM Proposition I applies to capital structure decisions made at any time during the life of the firm.
• C) By choosing positive-NPV projects that are worth more than their initial investment, the firm can enhance its value.
• D) Holding fixed the cash flows generated by the firm's assets, the choice of capital structure does not change the value of the firm.

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Definitions:

Required Rate Of Return

The minimum percentage return an investor expects to achieve by investing in a particular asset or project.

Tangible Costs

Costs that have a clear and direct physical presence or can be easily measured in monetary terms.

Investment Proposal

A formal suggestion for investing capital, typically encompassing projected costs, benefits, risks, and returns.

Net Present Value

A method used to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period of time.