Which of the Following Is One of the Advantages of Debt

question 1

Multiple Choice

Which of the following is one of the advantages of debt financing versus equity financing?

• A) interest does not have to be paid unless the company is profitable
• B) interest expenses can be deducted from company profits, thereby lowering the company's tax liability
• C) company profits can be distributed to bondholders in lieu of interest payments
• D) the funds do not need to be repaid, thus providing financial flexibility for the company

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