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:

Ability-To-Pay Principle

A taxation principle that suggests taxes should be levied according to an individual's or entity's ability to pay, favoring a more equitable distribution of the tax burden.

U.S. Income Tax

A tax imposed by the U.S. government on the income generated by businesses and individuals within its jurisdiction.

FICA Tax

A federal payroll tax in the United States that funds Social Security and Medicare programs.

Progressive

A term that may refer to a system or policy where the rate increases as the taxable amount increases, often used in the context of taxation or a general approach promoting change or innovation.