Equity is an attractive form of financing for a firm because it has additional tax advantages for the firm compared to debt.

Name: Equity is an attractive form of financing for a firm because it has additional tax advantages for the firm compared to debt.
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Question

Quizplus · Accepted Answer

This statement is false. Unlike debt, equity financing does not provide any tax advantages for the firm. In fact, dividends paid to equity holders are not tax deductible for the firm, while interest paid to debt holders is tax deductible.

Equity Is an Attractive Form of Financing for a Firm