Which of the following questions is FALSE?
A)With perfect capital markets,all securities are fairly priced and issuing securities is a zero-NPV transaction.
B)The fees associated with the financing of the project are independent of the project's required cash flows and should be ignored when calculating the NPV of the project.
C)When a firm borrows funds,a mispricing scenario arises if the interest rate charged differs from the rate that is appropriate given the actual risk of the loan.
D)The WACC,APV,and FTE methods determine the value of an investment incorporating the tax shields associated with leverage.

Question

Quizplus · Accepted Answer

The fees associated with financing the project should be included in the calculation of the NPV of the project as they directly impact the cash flows. Ignoring them would result in an inaccurate NPV calculation. Therefore, statement B is false. Statements A, C, and D are true.

Which of the Following Questions Is FALSE