Which of the Following Statements Is FALSE

question 53

Multiple Choice

Which of the following statements is FALSE?

• A)With no debt,the WACC is equal to the unlevered equity cost of capital.
• B)With perfect capital markets,a firm's WACC is dependent of its capital structure and is equal to its equity cost of capital only the firm it is unlevered.
• C)As the firm borrows at the low cost of capital for debt,its equity cost of capital rises,but the net effect is that the firm's WACC is unchanged.
• D)Although debt has a lower cost of capital than equity,leverage does not lower a firm's WACC.

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Definitions:

Mean Annual Temperature

The average temperature of a specific location over the course of a year, taking into account all seasonal variations.

Precipitation Ranges

The variability in the amount of precipitation (rain, snow, hail, etc.) an area receives over a period of time.

Tropical Rainforest

A hot, moist biome found near Earth's equator, characterized by high biodiversity and dense vegetation.

Temperate Deciduous Forest

A biome characterized by four seasons with trees that lose their leaves annually, found in regions with warm summers and cool winters.