Which of the Following Statements Is FALSE

question 14

Multiple Choice

Which of the following statements is FALSE?

• A)MM Proposition I applies to capital structure decisions made at any time during the life of the firm.
• B)When a firm issues new shares that account for a significant percentage of its outstanding shares, the transaction is called a 'leveraged recapitalisation'.
• C)The choice of capital structure does not change the value of the firm if the cash flows generated by the firm's assets are assumed to remain constant.
• D)By choosing positive-NPV projects that are worth more than their initial investment, the firm can enhance its value.

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Definitions:

Cash Disbursements

Outflows of cash for expenses, asset acquisitions, or other payments by a business during a specific period.

Operating Expenses

Recurring expenses related to the normal operations of a business, such as salaries, rent, and utilities.

Goods Purchased

The total value or volume of raw materials, components, or finished products acquired by a business for resale or production.

Production Budget

A detailed plan showing the number of units that must be produced during a period in order to satisfy both sales and inventory needs.