Which of the Following Statements Is False

question 8

Multiple Choice

Which of the following statements is false?

• A) To determine the benefit of leverage for the value of the firm, we must compute the present value of the stream of future interest tax shields the firm will receive.
• B) Because the cash flows of the levered firm are equal to the sum of the cash flows from the unlevered firm plus the interest tax shield, by the Law of One Price the same must be true for the present values of these cash flows.
• C) By increasing the amount paid to debt holders through interest payments, the amount of the pretax cash flows that must be paid as taxes increases.
• D) When a firm uses debt, the interest tax shield provides a corporate tax benefit each year.

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Definitions:

Axons

Long, slender projections of nerve cells that transmit electrical impulses away from the neuron's cell body to other neurons, muscles, or glands.

Transmitting Information

The process of conveying data, knowledge, or instructions from one individual, group, or device to another.

Generating Information

The process of creating new data, ideas, or knowledge that was not previously known or available.

Neurons

The basic working units of the brain, specialized cells responsible for receiving, processing, and transmitting information through electrical and chemical signals.