Which of the Following Statements Is False

question 81

Multiple Choice

Which of the following statements is false?

• A) If we can identify a comparison firm whose assets have the same risk as the project being evaluated, and if the comparison firm is levered, then we can use its equity cost of capital as the cost of capital for the project.
• B) We can calculate the cost of capital of the firm's assets by computing the weighted average of the firm's equity and debt cost of capital, which we refer to as the firm's weighted average cost of capital (WACC).
• C) The portfolio of a firm's equity and debt replicates the returns we would earn if the firm were unlevered.
• D) When evaluating any potential investment project, we must use a discount rate that is appropriate given the risk of the project's free cash flow.

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Definitions:

Environments

The surroundings or conditions in which an organism lives or operates, encompassing both natural and built settings, and social and cultural contexts.

Scheme

According to Piaget, an action pattern (such as a reflex) or mental structure that is involved in the acquisition or organization of knowledge.

Incorporate

To include or integrate a part into a whole, often referring to the process of legally forming a business corporation or combining elements.

Secondary Schemes

Developmental actions in infants that show a higher level of coordination and cognitive abilities, typically emerging around 12-18 months.