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Which of the following statements is FALSE? 1. When a firm has permanent debt, the debt capacity is not required to calculate the present value
Which of the following statements is FALSE? 1. When a firm has permanent debt, the debt capacity is not required to calculate the present value of the interest tax shield. 2. When a firm has predetermined debt, we can discount the interest tax shields using the risk free rate. 3. Firms with a target leverage ratio adjust their leverage to maintain a constant equity-to-value ratio. O a Statements 1, 2 and 3. O b. Statements 1 and 2 . Statement 1. Od Statement 2. Which of the following statements is TRUE? 1. When a firm has permanent debt, the cost of debt is not required to calculate the present value of the interest tax shield. 2. When we relax the assumption of a constant debt-to-equity ratio, the WACC for a project will change as the debt-to-equity ratio changes. 3. With a constant interest coverage policy, we can calculate the interest tax shield without knowing the debt capacity. O a. Statement b. Statements 2 and 3. . Statements 1 and 2 Od Statements 1, 2 and 3
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