Which of the Following Statements Is False

question 53

Multiple Choice

Which of the following statements is false?

• A) In the real world, specific projects should differ only slightly from the average investment made by the firm.
• B) We can estimate r_U for a new project by looking at single-division firms that have similar business risks.
• C) The project's equity cost of capital depends on its unlevered cost of capital, r_U, and the debt-equity ratio of the incremental financing that will be put in place to support the project.
• D) Projects may vary in the amount of leverage they will support - for example, acquisitions of real estate or capital equipment are often highly levered, whereas investments in intellectual property are not.

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Definitions:

Automatic Behavior

actions performed without conscious thought or intention, often as habits or learned responses, allowing efficient execution of routine tasks.

Uncertainty

The condition of being unsure or having doubts about something, often leading to a lack of confidence in decisions.

Novel Features

Unique or distinctive attributes, characteristics, or aspects not previously known or recognized.

Positive Traits

Characteristics of an individual that are beneficial, admirable, and contribute to their success or well-being.