A Firm Does Not Have to Repay Its Equity Funds

question 91

True/False

A firm does not have to repay its equity funds and is not obliged to pay dividends.Therefore equity is a cheaper source of funds than debt.

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Definitions:

Benefits-Received Tax

A taxation principle stating that the amount of tax an individual pays should correspond to the level of government services they receive.

Net Worth

The total value of an individual's or organization's assets minus its liabilities, representing the financial health or value.

Assets

Valuable items, resources, or properties owned by an individual, corporation, or country, which have economic value and can be converted into cash.

Liabilities

Financial obligations or debts that a company owes to others, which are expected to be paid in the future.