A firm does not have to repay its equity funds and is not obliged to pay dividends.Therefore equity is a cheaper source of funds than debt.

Name: A firm does not have to repay its equity funds and is not obliged to pay dividends.Therefore equity is a cheaper source of funds than debt.
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This statement is false. Equity may not have an obligation to repay funds or pay dividends but it is often a more expensive source of funding than debt due to the higher risk involved for investors.

A Firm Does Not Have to Repay Its Equity Funds