Which of the Following Is a Disadvantage to a Business

question 35

Multiple Choice

Which of the following is a disadvantage to a business of using debt to finance its capital projects?

• A) Contributes to the dilution of management control.
• B) Takes longer to acquire than equity financing.
• C) By making the business riskier, contributes to a higher weighted average cost of capital.
• D) Is more expensive than equity financing because of tax considerations.
• E) Reduces the positive impact of leverage in a company with growing earnings.