Which of the following is not an advantage of debt financing? Group of answer choices Shareholder control is not affected. Interest payments are cheaper than dividend payments. The return on shareholder’s equity may be higher. Interest is deductible from income for tax purposes.

Two advantages that debt financing has over financing from the issue of shares are:Group of answer choicesInterest expense can be claimed as a tax deduction and there is no dilution in share ownership.There is more profit available to pay dividends to shareholders and dividends can be claimed as a tax deduction.The principal must be paid back at maturity and dividends can be paid to shareholders because earnings per share increases.Interest payments on outstanding debt are required periodically and the interest expense can be claimed as a tax deduction.

Advantages of debt financing over equity financing include that ______. (Check all that apply.)Multiple select question.interest payments are optionalstockholders' control will not be diluteddebt financing does not require repaymentsinterest payments are tax deductible

The interest tax shield is a reason why:Group of answer choicescompanies tend to minimise their borrowingthe net cost of debt to a company is generally less than the cost of equitythe overall value of an unlevered company is equal to the value of a levered firmthe cost of debt is equal to the cost of equity for a company with a debt-to-equity ratio of less than 1companies tend to prefer equity financing over debt financing PreviousNext

One advantage of using equity financing is dividends are discretionary, not an obligation like debt financing.A.TrueB.False

Select all that applyWhich of the following statements are true? (Check all that apply.)Multiple select question.An advantage of equity over debt financing is corporations are not required to pay dividends or repay stockholders.Corporations rely more on debt financing than equity financing because debt financing is more plentiful.Corporations rely more on equity financing than debt financing because debt financing is more expensive.Two sources of financing for a corporation are debt and equity.