Which of the Following Is Not an Advantage of Issuing

question 17

Multiple Choice

Which of the following is not an advantage of issuing bonds instead of common stock?

• A) Tax savings result.
• B) Income to common shareholders may increase.
• C) Earnings per share on common stock may be lower.
• D) Stockholder control is not affected.

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Definitions:

Useful Life

The estimated duration a fixed asset is expected to be productive for its intended use, impacting depreciation calculations.

Net Cash Flows

The amount of cash that is generated or lost by a business during a given period, taking into account cash inflows and outflows from operating, investing, and financing activities.

Annual Incomes

The total amount of income received annually from all sources before any deductions.

Cash Payback

A capital budgeting technique that calculates the period required for an investment to generate cash flows sufficient to recover its initial cost.