Which of the Following Statements Is FALSE

question 9

Multiple Choice

Which of the following statements is FALSE?

• A)The firm's weighted average cost of capital, denoted r_wacc, is the cost of capital that reflects the risk of the overall business, which is the combined risk of the firm's equity and debt.
• B)When using the discounted free cash flow model, we should use the firm's equity cost of capital.
• C)We interpret r_wacc as the expected return the firm must pay to investors to compensate them for the risk of holding the firm's debt and equity together.
• D)Intuitively, the difference between the discounted free cash flow model and the dividend-discount
• Model is that in the divided-discount model the firm's cash and debt are included indirectly through the effect of interest income and expenses on earnings in the dividend-discount model.

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Definitions:

Conscious Part

The aspect of the mind that is aware of one's self, environment, and thoughts, enabling deliberate actions and responses.

Navigates

The process of determining the path or direction to a particular destination; also refers to how one moves through or deals with a complex system or environment.

Super-Ego

A component of Sigmund Freud's psychoanalytic theory, representing the moral conscience and the standards by which the ego judges behavior.

Free Association

A psychoanalytic technique involving saying whatever comes into your head.