Which Statement Describes the Major Drawback to the Use of Debt

question 15

Multiple Choice

Which statement describes the major drawback to the use of debt financing?

• A)The interest paid is not tax-deductible.
• B)Debt financing is a form of permanent financing.
• C)Debt financing gives common stockholders a voice in company management.
• D)Financial risk is always a possibility with debt financing.
• E)Dividends are paid from after-tax income.

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