An Advantage of Financing Operations with Debt Rather Than Equity

question 53

Multiple Choice

An advantage of financing operations with debt rather than equity is:

• A) the tax deductibility of interest expense on debt.
• B) the legal requirement to repay the principal.
• C) the legal requirement to pay interest.
• D) all of the above.

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Definitions:

Syndesmosis

A type of fibrous joint in which two bones are joined together by a ligament or a membrane, allowing for slight movement.

Gomphosis

Fibrous joint in which a peglike process fits into a hole.

Symphysis

A type of cartilaginous joint where bones are fused together by fibrocartilage, providing strength with limited movement.

Fibrocartilage

A tough type of cartilage found at the intersections of tendons, ligaments, and bones, providing strength and flexibility.