What Is One Advantage of Debt

question 31

Multiple Choice

What is one advantage of debt?

• A)It allows large projects to be built.
• B)It discourages borrowing.
• C)It encourages borrowing.
• D)It contributes to recessions.

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Definitions:

Relevant Range

The range of operating activity within which the assumptions about fixed and variable cost behaviors remain valid.

Fluctuate

To change or vary irregularly in number, amount, volume, or intensity.

Committed Fixed Cost

Long-term fixed costs that cannot be easily changed and are typically tied to the investment in facilities, equipment, and basic organizational structure.

Long-Term Equipment Lease

A long-term equipment lease is a contractual agreement allowing a business to use equipment for a prolonged period in exchange for regular payments.