Which of the following statements is FALSE?

1. In the flow-to-equity valuation method, the projects free cash flows are discounted using the equity cost of capital.

2. When a firm has permanent debt, the cost of debt is not required to calculate the present value of the interest tax shield.

3. Eurodollar bonds are issued by foreign (non-U.S.) companies in the U.S. bond market.

4. Private companies usually issue preferred stock when they sell equity for the first time to outside investors.

1) Statement 3.

2) Statement 2 and 3.

3) Statements 1 and 3.

4) Statements 2 and 4.