Which One of the Following Statements Is NOT Correct

question 82

Multiple Choice

Which one of the following statements is NOT correct?

• A) A leveraged firm is riskier than a firm that is not leveraged.
• B) A leveraged firm is less risky than a firm that is not leveraged.
• C) A firm that uses debt magnifies the return to its shareholders.
• D) A firm that does not use debt incurs opportunity cost of increasing value of shares.

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Definitions:

Scrap Value

The estimated resale value of an asset at the end of its useful life.

Heavy Equipment

Larger, more specialized pieces of machinery used in construction, mining, and heavy industry, such as bulldozers, cranes, and excavators.

Sum-Of-The-Years-Digits

A depreciation method that results in a more accelerated write-off of assets than the straight-line method, involving adding the digits of the years of an asset's useful life.

Heavy Equipment

Large machinery used in construction, mining, and manufacturing, essential for executing large-scale tasks.