Debt is generally the least expensive source of capital.This is primarily due to ________.

Question

Quizplus · Accepted Answer

Debt is less risky than equity because it usually has a fixed interest rate and a finite maturity date, making it easier to plan for and manage cash flows. Additionally, interest payments on debt are tax deductible, making it a more cost-effective financing option than equity. This leads to debt generally being the least expensive source of capital.

Debt Is Generally the Least Expensive Source of Capital