Which of the Following Statements Is FALSE

question 43

Multiple Choice

Which of the following statements is FALSE?

• A)Because the WACC incorporates the tax savings from debt,we can compute the levered value of an investment,which is its value including the benefit of interest tax shields given the firm's leverage policy,by discounting its future free cash flow using the WACC.
• B)The WACC incorporates the benefit of the interest tax shield by using the firm's before-tax cost of capital for debt.
• C)When the market risk of the project is similar to the average market risk of the firm's investments,then its cost of capital is equivalent to the cost of capital for a portfolio of all of the firm's securities;that is,the project's cost of capital is equal to the firm's weighted average cost of capital (WACC).
• D)A project's cost of capital depends on its risk.

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Definitions:

Transformational Leadership

Leadership that provides followers with a new vision that instills true commitment.

Intelligence

A multifaceted ability that encompasses learning, understanding, problem-solving, and adaptability in different environments.

Tolerance for Ambiguity

The capacity to remain comfortable and composed when faced with uncertain situations or unclear information.

Persisting Resistance

Continuous opposition or unwillingness to accept or comply with changes or new ideas within an organization or group.