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:

DSM-IIIR

The third edition, revised, of the Diagnostic and Statistical Manual of Mental Disorders, a handbook used by healthcare professionals as the authoritative guide to diagnosing mental disorders.

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The process of identifying a disease or condition from its symptoms and signs by examination and various tests.

Neuropsychological Test Battery

A comprehensive set of standardized tests used to assess a broad range of cognitive, sensory, and motor functions.

Halstead-Reitan

A neuropsychological test battery used to evaluate brain and nervous system functioning on several levels and aspects.