Which of the Following Statements Is False

question 46

Multiple Choice

Which of the following statements is false?

• A) The firm's weighted average cost of capital (WACC) denoted r_wacc is the cost of capital that reflects the risk of the overall business, which is the combined risk of the firm's equity and debt.
• B) Intuitively, the difference between the discounted free cash flow model and the dividend-discount model is that in the divided-discount model the firm's cash and debt are included indirectly through the effect of interest income and expenses on earnings.
• C) We interpret r_wacc as the expected return the firm must pay to investors to compensate them for the risk of holding the firm's debt and equity together.
• D) When using the discounted free cash flow model we should use the firm's equity cost of capital.

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Definitions:

Chase Strategy

A capacity management approach that involves adjusting workforce and production levels to directly match demand fluctuations.

Production Planner

A professional responsible for determining the schedule and workflow of manufacturing processes to ensure efficient production.

Chase Strategy

A business approach where production meets the exact demand without holding excess inventory, adjusting output as needed.

Production Rate

The speed at which goods are manufactured or processed in a given amount of time, often measured in units per hour or per day.