Which of the Following Statements Is FALSE

question 21

Multiple Choice

Which of the following statements is FALSE?

• A)The firm's weighted average cost of capital (WACC)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)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.
• 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)When using the discounted free cash flow model we should use the firm's equity cost of capital.

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Definitions:

General Checking Account

A type of bank account that allows for the deposit and withdrawal of funds for daily transactions.

Practice's Savings

Refers to the financial reserves or accumulated funds saved by a business or practice.

Workers' Compensation

A form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue their employer for the tort of negligence.

Crushing Injury

A type of injury where a part of the body is subjected to a high degree of force or pressure, often resulting in compression and significant damage to the area.