Which of the Following Statements Is False

question 23

Multiple Choice

Which of the following statements is false?

• A) The APV approach explicitly values the market imperfections and therefore allows managers to measure their contribution to value.
• B) We need to know the debt level to compute the APV, but with a constant debt-equity ratio we need to know the project's value to compute the debt level.
• C) The WACC method is more complicated than the APV method because we must compute two separate valuations: the unlevered project and the interest tax shield.
• D) Implementing the APV approach with a constant debt-equity ratio requires solving for the project's debt and value simultaneously.

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Definitions:

Kubler-Ross's Typology

Denotes the five stages of grief as proposed by Elisabeth Kübler-Ross, encompassing denial, anger, bargaining, depression, and acceptance.

Denial

A psychological defense mechanism where a person refuses to accept reality or facts, thereby avoiding a potentially distressful situation.

Kubler-Ross's Typology

A model describing five stages of emotional response to grief and loss, namely denial, anger, bargaining, depression, and acceptance.

Refusing

involves the act of saying no or denying a request, offer, or demand.