Which of the Following Statements Is FALSE

question 84

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.

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Definitions:

Absolute Advantage

The ability of a country, individual, or firm to produce more of a good or service with the same amount of resources compared to others.

Trade

The exchange of goods and services between parties, which can be within or across national borders.

Trade Deficit

A situation where a country's imports of goods and services exceed its exports, resulting in a negative balance of trade.

Productive Resource

An asset or input used in the production of goods and services, such as labor, land, and capital.