One of the Most Important Factors in Making Debt Less

question 92

Multiple Choice

One of the most important factors in making debt less expensive than equity is:

• A) the tax deductibility of depreciation.
• B) the tax deductibility of equity.
• C) the tax deductibility of dividends.
• D) the tax deductibility of interest.

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Definitions:

Capital Balance

The amount of money that owners have invested in a firm minus any withdrawals made by the owners.

Capital Balance

The capital balance in a company's equity section represents the owner's investment, adjusted for withdrawals and profits or losses.

Withdraws

Money taken out from a business by its owners for personal use.

Bonus Distribution

The payout of extra compensation to employees or partners beyond their regular earnings.