Which of the Following Statements Is FALSE

question 70

Multiple Choice

Which of the following statements is FALSE?

• A)Rather than set debt according to a target debt-equity ratio or interest coverage level,a firm may adjust its debt according to a fixed schedule that is known in advance.
• B)When we relax the assumption of a constant debt-equity ratio,the equity cost of capital and WACC for a project will change over time as the debt-equity ratio changes.
• C)When we relax the assumption of a constant debt-equity ratio,the APV and FTE methods are difficult to implement.
• D)If a firm is using leverage to shield income from corporate taxes,then it will adjust its debt level so that its interest expenses grow with its earnings.

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Definitions:

NumPtr

A pointer variable, often used in programming to reference the memory location of a number.

Initialized

Refers to the process of assigning an initial value to a variable or object at the time of its creation in programming.

Declared

A term referring to variables or functions that are given a type and identifier in a program's code but not necessarily initialized.

Arithmetic

A branch of mathematics dealing with the study and manipulation of numbers through operations such as addition, subtraction, multiplication, and division.