Which of the Following Statements Is False

question 35

Multiple Choice

Which of the following statements is false?

• A) The WACC can be used throughout the firm as the company-wide cost of capital for new investments that are of comparable risk to the rest of the firm and that will not alter the firm's debt-equity ratio.
• B) A disadvantage of the WACC method is that you need to know how the firm's leverage policy is implemented to make the capital budgeting decision.
• C) The intuition for the WACC method is that the firm's weighted average cost of capital represents the average return the firm must pay to its investors (both debt and equity holders) on an after-tax basis.
• D) To be profitable, a project should generate an expected return of at least the firm's weighted average cost of capital.

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Definitions:

Product Design

The process of defining the appearance, functionality, and manufacturability of a product to be offered to consumers.

Social Loafing

A phenomenon where individuals exert less effort to achieve a goal when they work in a group than when they work alone.

Synergy

The increased effectiveness that results when individuals, groups, or systems work together compared to when they operate separately.

Design a New Product

The process of creating a novel item or service that fulfills a specific consumer need or addresses a particular market niche.