Which of the following is an advantage of debt financing?
A) The interest payments a firm makes on debt are a tax-deductible expense.
B) A firm using debt financing is not required to make fixed payments.
C) It is less risky than equity financing.
D) It is more flexible than equity financing.

Question

Quizplus · Accepted Answer

Interest payments on debt are tax-deductible, which can reduce the overall cost of borrowing for a firm.

Which of the Following Is an Advantage of Debt Financing