Economics · Cost of Capital
Debt is generally considered a cheaper source of finance for a company because:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Owners of the business expect a low rate of return
- 2Interest paid on debt is tax-deductible, which reduces the taxable income✓
- 3Both A and B
- 4None of the above
Correct answer
Interest paid on debt is tax-deductible, which reduces the taxable income
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