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:

Back Pay

The sum of money owed to an employee for work performed or as compensation for wrongful termination, often awarded following a legal or internal resolution.

Progressive Discipline

A method of managing employee performance issues through a series of escalating steps, including verbal warnings, written warnings, suspension, and finally termination.

Termination

The action of ending the employment of an employee or the conclusion of an employment contract.

Public Policy

Governmental guidelines, rules, and actions, intended to address public issues and affect how resources are allocated and managed within a society.