Which Statement Concerning the MM Extension with Growth Is Incorrect

question 60

Multiple Choice

Which statement concerning the MM extension with growth is incorrect?

• A)The value of a growing tax shield is greater than the value of a constant tax shield.
• B)For a given D/E, the levered cost of equity is greater than the levered cost of equity under MM's original (with tax) assumptions.
• C)For a given D/E, the WACC is less than the WACC under MM's original (with tax) assumptions.
• D)The total value of the firm increases with the amount of debt.

---

Definitions:

Viral Spread

The rapid sharing of content, such as a video, article, or post, across the internet, leading to widespread popularity.

Web Scraping

The automated extraction of data from websites, using software to access and collect information for various purposes.

Nonresponse Bias

A bias that occurs in survey results when the individuals who do not respond differ significantly from those who do, potentially skewing the data.

30-minute Phone Survey

A research method involving a telephone interview, typically lasting half an hour, used to gather data or opinions from participants.