Which of the Following Statements Is FALSE

question 93

Multiple Choice

Which of the following statements is FALSE?

• A) The terminal of continuation value of the project represents the market value (as of the last forecast period) of the free cash flow from the project at all future dates.
• B) The incremental effect of a project on the firm's available cash is the project's free cash flow.
• C) (1 - τ_c) × Depreciation is called the depreciation tax shield.
• D) To evaluate a capital budgeting decision, we must determine its consequences for the firm's available cash.

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Definitions:

Equity Holders

Individuals or entities that own equity instruments in a corporation, such as stocks, and thus have an ownership interest in the company.

Financial Structure

The mix of debt and equity that a company uses to finance its operations and growth.

Order For Relief

A court order in bankruptcy proceedings that allows for the commencement of bankruptcy processes and relief for the debtor.

Involuntary Bankruptcy

A legal process initiated by creditors rather than the debtor, where a court is asked to declare a debtor bankrupt and liquidate assets to pay off debt.