Which of the Following Is an Advantage of a Company

question 63

Multiple Choice

Which of the following is an advantage of a company using equity rather than debt to finance a project?

• A)Dividends do not need to be paid.
• B)Interest is tax deductible whereas dividends paid are not.
• C)Dividends always require less cash than does paying interest on debt.
• D)All of these ans choices are advantages of using equity rather than debt to finance a project.

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Definitions:

PE Ratio

The price-to-earnings ratio, a valuation metric that compares a company's stock price to its earnings per share.

Stock Repurchase

A company's buying back of its own shares from the marketplace, which can reduce the number of outstanding shares and potentially increase the stock value.

Stock Dividend

A payment made by a corporation to its shareholders in the form of additional shares, rather than cash.

Earnings Per Share

A company's profit divided by the outstanding shares of its common stock, showing the portion of a company's profit allocated to each share of stock.