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EpiscoWhat EpiscoWhat
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6 years ago
Which of the following statements is FALSE?
A) The firm's unlevered cost of capital is equal to its pre-tax weighted average cost of capital - that is, using the pre-tax cost of debt, rd, rather than its after-tax cost, rd (1 - τc ).
B) A firm's levered cost of capital is a weighted average of its equity and debt costs of capital.
C) When the firm maintains a target leverage ratio, its future interest tax shields have similar risk to the project's cash flows, so they should be discounted at the project's unlevered cost of capital.
D) The first step in the APV method is to calculate the value of free cash flows using the project's cost of capital if it were financed without leverage.
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
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anicidanicid
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6 years ago
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EpiscoWhat Author
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6 years ago
Correct Slight Smile TY
cartoon
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Yesterday
Smart ... Thanks!
jayfo05
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2 hours ago
I appreciate what you did here, answered it right Smiling Face with Open Mouth
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