Which of the Following Statements Is FALSE

question 46

Multiple Choice

Which of the following statements is FALSE?

• A)To determine the benefit of leverage for the value of the firm,we must compute the present value of the stream of future interest tax shields the firm will receive.
• B)Because the cash flows of the levered firm are equal to the sum of the cash flows from the unlevered firm plus the interest tax shield,by the Law of One Price the same must be true for the present values of these cash flows.
• C)By increasing the amount paid to debt holders through interest payments,the amount of the pre-tax cash flows that must be paid as taxes increases.
• D)When a firm uses debt,the interest tax shield provides a corporate tax benefit each year.

---

Definitions:

First-Degree

Refers to the mildest form of burn affecting only the outer layer of skin, causing redness and pain.

Slight Sunburn

Mild overexposure of the skin to ultraviolet light from the sun, causing redness and discomfort but usually healing without serious consequences.

Venous Thrombosis

The formation of a blood clot within a vein, which restricts blood flow and can lead to swelling and pain, potentially causing serious health problems if dislodged.

Increased Immunity

An enhanced state of the immune system's ability to fight off pathogens and diseases.