Pathways Logistics is considering issuing bonds to help fund the purchase of land for a new production facility. Which statement best represents a potential disadvantage that Pathways should consider before committing to the bond sale?
A) Bonds will increase the company's debt.
B) Bonds can change the firm's ownership.
C) Bond interest payments are not tax deductible.
D) Bond payments are permanent.
E) Bonds will require dividend payments each year.

Question

Quizplus · Accepted Answer

Bonds increase a company's debt because they are a form of borrowing. The company must repay the principal amount of the bonds at maturity and make regular interest payments until then.

Pathways Logistics Is Considering Issuing Bonds to Help Fund the Purchase