Which of the Following Statements Is False

question 7

Multiple Choice

Which of the following statements is false?

• A) To determine the project's debt capacity for the interest tax shield calculation, we need to know the value of the project.
• B) To compute the present value of the interest tax shield, we need to determine the appropriate cost of capital.
• C) Because we don't value the tax shield separately, with the APV method we need to include the benefit of the tax shield in the discount rate as we do in the WACC method.
• D) A target leverage ratio means that the firm adjusts its debt proportionally to the project's value or its cash flows.

---

Definitions:

Recorded Cost

The cost of an asset as it appears in a company's books or financial statements, reflecting the original cost of acquisition.

Physical Count

An actual count of inventory or assets, conducted at certain intervals, to ensure the accuracy of records and accounts.

Allocating Cost

The process of assigning costs to various cost objects such as products, services, or departments for accounting purposes.

Inventory Accounting

A method of accounting that deals with valuing and accounting for changes in inventoried assets, impacting how businesses report their cost of goods sold and value of inventory in financial statements.