Which of the Following Statements Is FALSE

question 103

Multiple Choice

Which of the following statements is FALSE?

• A) Issuance costs increase the WACC.
• B) External equity is less expensive than retained earnings.
• C) A project that can be financed with internal funds will be less costly than the same project if it were financed with external funds.
• D) Issuance costs should be treated as cash outflows in NPV analysis.

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Definitions:

Product Price

refers to the amount of money required to purchase a specific good or service offered by a business.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in market balance.

Market Demand

The total demand for a product or service within a particular market, including all consumers' willingness and ability to purchase at various prices.

Purely Competitive Market

A market structure characterized by a large number of firms or sellers, each of which has a relatively small market share and sells a homogeneous product, with no single firm able to influence market price.