Which of the Following Is an Advantage of a Company

question 41

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)No taxation similar to bonds.

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Definitions:

Annual Rate

The interest rate over a year's time, often used in financial contexts to describe the yield of an investment or the cost of a loan.

Debt Payments

Money that is paid back to reduce or settle the amount borrowed, including both the principal and the interest.

Single Payment

A one-time transaction to settle a liability or complete a purchase.

Interest Annually

Interest annually refers to interest that is calculated and added to the principal balance once per year.