Which of the following statements is incorrect:

Multiple Choice

• Sales minus variable costs equals fixed costs plus depreciation can be rearranged to solve for the accounting breakeven level.

• The basic idea behind sensitivity analysis is to freeze all the variables except one and then see how sensitive the NPV is to changes in that variable.

• There is only one growth rate for a firm that does not issue new equity and its dividend policy, profit margin and fixed asset turnover ratios are all fixed.

• If a firm uses its WACC to evaluate projects that have higher risk than the overall firm, then over time the firm will both accept unprofitable investments and become increasingly risky.

• Coupon rate is the return the firms creditors demand on new borrowing in the bond market.