Which of the Following Statements Concerning the Compressed Adjusted Present

question 49

Multiple Choice

Which of the following statements concerning the compressed adjusted present value (APV) model is NOT CORRECT?

• A) the value of a growing tax shield is greater than the value of a constant tax shield.
• B) for a given d/s, the levered cost of equity in the compressed apv model is greater than the levered cost of equity under mm's original (with tax) assumptions.
• C) for a given d/s, the wacc in the compressed apv model is greater than the wacc under mm's original (with tax) assumptions.
• D) the total value of the firm is independent of the amount of debt it uses.
• E) the tax shields should be discounted at the unlevered cost of equity.

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Definitions:

Anterior

Located towards the front of the body in anatomical positions.

Distal

Referring to a position farther from the point of attachment or the trunk of the body.

Ventral

Pertaining to the front or anterior part of the body; opposite of dorsal.

Cephal/o

A prefix in medical terminology meaning "head."