Which of the Following Statements Is False

question 3

Multiple Choice

Which of the following statements is false?

• A) Rather than set debt according to a target debt-equity ratio or interest coverage level, a firm may adjust its debt according to a fixed schedule that is known in advance.
• B) When we relax the assumption of a constant debt-equity ratio, the equity cost of capital and WACC for a project will change over time as the debt-equity ratio changes.
• C) When we relax the assumption of a constant debt-equity ratio, the APV and FTE methods are difficult to implement.
• D) If a firm is using leverage to shield income from corporate taxes, then it will adjust its debt level so that its interest expenses grow with its earnings.

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Definitions:

Right to Marry

the legal and fundamental human right allowing individuals to enter into marriage with their chosen partner.

Social Security

A government program designed to provide financial assistance to retirees, disabled individuals, and survivors of deceased workers, aiming to reduce poverty in old age.

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The Baby Boom refers to the dramatic increase in birth rates in the post-World War II period, particularly noticeable in the United States, Canada, and Australia, leading to significant demographic changes.

Life Expectancy

The average period that an individual is expected to live, statistically determined based on various factors including country, age, gender, and health conditions.