Which of the Following Statements Is FALSE

question 70

Multiple Choice

Which of the following statements is FALSE?

• A)Rather than set debt according to a target debt-equity ratio or interest coverage level,a firm may adjust its debt according to a fixed schedule that is known in advance.
• B)When we relax the assumption of a constant debt-equity ratio,the equity cost of capital and WACC for a project will change over time as the debt-equity ratio changes.
• C)When we relax the assumption of a constant debt-equity ratio,the APV and FTE methods are difficult to implement.
• D)If a firm is using leverage to shield income from corporate taxes,then it will adjust its debt level so that its interest expenses grow with its earnings.

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Definitions:

Brands

Names, terms, designs, symbols, or any other features that identify one seller's goods or services as distinct from those of other sellers.

Opinion Leader

An individual who influences others' attitudes or behaviors because they are considered knowledgeable or authoritative in a specific area.

Social Influence

The effect that the words, actions, or presence of other people have on an individual’s thoughts, feelings, attitudes, or behavior.

Opinion Leaders

Individuals who have the ability to influence the opinions or behaviors of others due to their knowledge, authority, or position within a community.