Which of the Following Is One of the Main Advantages

question 99

Multiple Choice

Which of the following is one of the main advantages of using long-term debt financing instead of equity financing?

• A)Not having to pay back the principal
• B)Ability to raise large amounts of capital
• C)Tax-deductibility of interest
• D)Tax-deductibility of dividends

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Definitions:

Equity

The value of an asset after deducting what is owed on it, or the ownership interest in a company as held by shareholders.

Tax Revenue

The income that is collected by the government through various forms of taxation, including income taxes, corporate taxes, and sales taxes, which is then used to fund public services and government operations.

Equilibrium Price

The market price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Consumer Surplus

The gap between what consumers are prepared and can afford to pay for a product or service versus what they end up paying.