Which of the Following Statements Is False

question 81

Multiple Choice

Which of the following statements is false?

• A) As a general rule, the WACC method is the easiest to use when the firm will maintain a fixed debt-to-value ratio over the life of the investment.
• B) The FTE method is typically used only in complicated settings for which the values of other securities in the firm's capital structure or the interest tax shield are themselves difficult to determine.
• C) For alternative leverage policies, the FTE method is usually the most straightforward approach.
• D) When used consistently, the WACC, APV, and FTE methods produce the same valuation for the investment.

---

Definitions:

Make-Or-Buy Decision

The strategic choice between producing a good or service internally or purchasing it from an external supplier.

Operational Risk

A measure of a firm’s inability to document the work remote employees do, describe the different situations they might face, and direct their responses in each scenario.

Outsourcing Vendor

A third-party company that provides services or performs tasks that a company might otherwise have done in-house, often to save costs or access specialized expertise.

Insourcing

The practice of using an organization's internal resources to complete tasks or projects that could be outsourced to external providers.