Consider the Following Equation for the Question(s)below

question 15

Multiple Choice

Consider the following equation for the question(s) below:
E + D = U = A
-Which of the following statements is FALSE?

• A)With no debt, the WACC is equal to the unlevered equity cost of capital.
• B)As the firm borrows at the low cost of capital for debt, its equity cost of capital rises, but the net effect is that the firm's WACC is unchanged.
• C)With perfect capital markets, a firm's WACC is dependent on its capital structure and is equal to its equity cost of capital only if the firm is unlevered.
• D)Although debt has a lower cost of capital than equity, leverage does not lower a firm's WACC.

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Definitions:

Performance Evaluations

The process of assessing and providing feedback on employee performance, usually involving the setting of performance standards and evaluation against these standards.

Job Tension

The stress and strain experienced by individuals due to demands and pressures of their work environment.

Scapegoating

The practice of unfairly blaming an individual or group for problems or failures, often to deflect responsibility or criticism from oneself.

Cultural Blocks

Psychological barriers or social norms that inhibit creativity or prevent individuals from thinking innovatively within a cultural context.