The major advantages of long-term debt include all the following EXCEPT _______.
A) decreased financial risk
B) relatively low after-tax cost
C) firm owners' ability to maintain control over their firm
D) increased earnings per share through financial leverage

Question

Quizplus · Accepted Answer

Decreased financial risk is not an advantage of long-term debt. In fact, taking on long-term debt increases a company's financial risk due to the obligation to make regular interest payments and eventually repay the principal. The other options (B, C, D) are considered advantages of using long-term debt.

The Major Advantages of Long-Term Debt Include All the Following