Which of the Following Statements Is FALSE

question 48

Multiple Choice

Which of the following statements is FALSE?

• A)We begin the capital budgeting process by determining the incremental earnings of a project.
• B)The marginal corporate tax rate is the tax rate the firm will pay on an incremental dollar of pre-tax income.
• C)Investments in plant,property,and equipment are directly listed as expense when calculating earnings.
• D)The opportunity cost of using a resource is the value it could have provided in its best alternative use.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, usually presented as an expense on the income statement.

Bond Issue

The process by which a government or corporation raises funds by selling bonds to investors, which are to be repaid with interest at a future date.

Amortizing

The process of spreading out a loan into a series of fixed payments over time.

Bond Discount

The difference when a bond is sold for less than its face value or par value.