Which of the Following Statements Is FALSE

question 73

Multiple Choice

Which of the following statements is FALSE?

• A)For capital budgeting purposes,the project's financing is the incremental financing that results if the firm takes on the project.
• B)Projects with safer cash flows can support more debt before they increase the risk of financial distress for the firm.
• C)If the positive free cash flow from a project will increase the firm's cash holdings,then this growth in cash is equivalent to a reduction in the firm's leverage.
• D)The incremental financing of a project corresponds directly to the financing that is directly tied to the project.

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Definitions:

Diminishing Marginal Utility

The principle that as a person increases consumption of a product, there is a decline in the additional satisfaction or utility that person gains from consuming one more unit of the product.

Demand Curve

A graph showing the relationship between the quantity of a good that consumers want to buy and its price.

Downward Slope

A graphical representation indicating a decrease or decline in value, often used in reference to graphs showing relationships such as demand curves.

Topographical Map

A type of map characterized by large-scale detail and quantitative representation of relief, usually using contour lines.