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Advantage of Debt financing is: ?

<p style="text-align:justify;"> </p> <p style="text-align:justify;"><strong><span>(a) Interest is tax-deductible,</span></strong></p> <p style="text-align:justify;"><strong><span>(b) It reduces WACC,</span></strong></p> <p style="text-align:justify;"><strong><span>(c) Does not dilute owners control,</span></strong></p> <p style="text-align:justify;"><span><strong>(d) All of the above.</strong></span></p>

Accounting Financial Accounting Financial Management managerial accounting
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Question added by VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.
Date Posted: 2014/09/20
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Deleted user
by Deleted user

a)  Interest  is  tax - deductible

Muhammad Farrukh
by Muhammad Farrukh , Summer Trainee , Habib Finance International Limited

(a)

Ahmed Abd Alwahab Awad Ibrahim
by Ahmed Abd Alwahab Awad Ibrahim , Chief Accounting , ICCDP

 Answer is #a- Interest is tax-deductible,

Ahmed Abdi Mahad
by Ahmed Abdi Mahad , Director of Internal Auditing Directorate , Jigjiga University

Some of the advantages of debt financing are:

  1. Interest is tax-deductible
  2. The repayment of debt is in cheaper dollars during inflation,
  3. There is no dilution of company control,
  4. It may safeguard the company’s future financial stability, for example, in times of tight money markets when short-term loans are not available, etc.So, choice D, All of the above is the answer

 

 

manaf almas
by manaf almas , Auditor , DAR AL NUZUM PUBLIC ACCOUNTANTS

D is the correct answer

Tanveer Qureshi
by Tanveer Qureshi , Director , Qureshi Associates

Option-A.

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