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:

MRP Tables

Tables used in Material Requirements Planning, showcasing schedules for when materials are needed in the manufacturing process to meet production goals.

Bill of Material

An exhaustive inventory of all raw materials, parts, and assemblies required to produce or mend a product or service.

Lot-For-Lot

An inventory management strategy where the order quantity is set to match the exact demand for the product, minimizing stock levels.

Lot Sizing

The determination of the optimal quantity of units to produce or order in a single batch, considering factors like demand, production costs, and storage capacity.