Which of the Following Statements Is False

question 27

Multiple Choice

Which of the following statements is false?

• A) The tax deductibility of interest lowers the effective cost of debt financing for the firm.
• B) When a firm uses debt financing, the cost of the interest it must pay is offset to some extent by the tax savings from the interest tax shield.
• C) With tax-deductible interest, the effective after-tax borrowing rate is r(τ_C).
• D) The WACC represents the cost of capital for the free cash flow generated by the firm's assets.

---

Definitions:

Emotional Intelligence

The ability to perceive, control, and evaluate emotions in oneself and others, and to use this information to guide one's thinking and actions.

Traditional Views

Traditional views refer to beliefs, values, or practices that have been long established and passed down through generations.

Gifted Children

Children who display exceptional intellectual abilities, creativity, or talent at a level significantly ahead of their chronological peers.

Terman's Longitudinal Study

A long-term research project that began in the early 20th century, studying the lives of gifted individuals.