Which of the Following Statements Is FALSE

question 70

Multiple Choice

Which of the following statements is FALSE?

• A)The higher the firm's leverage,the more the firm exploits the tax advantage of debt,and the lower its WACC.
• B)Corporate taxes lower the effective cost of debt financing,which translates into a reduction in the weighted average cost of capital.
• C)Because the firm's free cash flow is computed without considering the firm's leverage,we account for the benefit of the interest tax shield by calculating the WACC using the before-tax cost of debt.
• D)The reduction in the WACC increases with the amount of debt financing.

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Definitions:

Hippocampus

A critical structure within the brain's temporal lobe, associated with the formation of memories and spatial navigation.

Steroid Hormones

Lipid-soluble hormones derived from cholesterol that regulate a variety of physiological functions including metabolism, immune response, and reproduction.

Cholesterol

A type of lipid that is essential for the formation of cell membranes, production of hormones, and synthesis of vitamin D, among other functions.

Gonadal Hormones

Steroid hormones produced by the gonads (ovaries and testes) that play key roles in reproductive functions and secondary sexual characteristics.