PRC-3 · Chapter 4 · Question 4 of 65
When a company is choosing between issuing new shares (equity) or taking a bank loan (debt), what is a major financial advantage of choosing the bank loan?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Interest paid on debt is usually tax-deductible
Explanation
A key advantage of debt financing over equity is that the interest payments made on debt are typically treated as tax-deductible expenses.
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