Which of the Following Statements Is False

question 55

Multiple Choice

Which of the following statements is false?

• A) With no debt, the WACC is equal to the unlevered equity cost of capital.
• B) With perfect capital markets, a firm's WACC is dependent on its capital structure and is equal to its equity cost of capital only if the firm is unlevered.
• C) As the firm borrows at the low cost of capital for debt, its equity cost of capital rises, but the net effect is that the firm's WACC is unchanged.
• D) Although debt has a lower cost of capital than equity, leverage does not lower a firm's WACC.

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Definitions:

Price Field

A column in a database or software application where the price of an item or service is recorded.

Lookup Field

A field in a database that allows the user to select a value from another table, linking the two tables together.

Table Design View

An interface within database applications that allows users to define or modify the structure of a database table.

Field Properties Pane

A user interface element in database and spreadsheet software that allows users to view and modify the properties of a selected field.