Which of the Following Statements Is FALSE

question 30

Multiple Choice

Which of the following statements is FALSE?

• A)The project's free cash flow to equity shows the expected amount of additional cash the firm will have available to pay dividends (or conduct share repurchases)each year.
• B)The value of the project's FCFE should be identical to the NPV computed using the WACC and APV methods.
• C)The value of the project's FCFE represents the gain to shareholders from the project.
• D)Because interest payments are deducted before taxes,we adjust the firm's FCF by their before-tax cost.

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Definitions:

Expenses

Costs incurred in the operation of a business to earn revenue, including operating and non-operating expenses.

Revenues

Income that a business receives from its normal business activities, usually from the sale of goods and services to customers.

Asset Account

An account that represents a resource owned or controlled by a company that is expected to provide future economic benefits.

Consumed

Used up or exhausted, particularly in reference to resources or goods.