Paying dividends is more expensive than paying bond interest because interest paid to bondholders is tax deductible,but dividends paid to shareholders are not.

Question

Quizplus · Accepted Answer

Bond interest is considered a business expense and is therefore tax deductible, whereas dividends are not tax deductible. This means that paying dividends results in a higher cost to the company compared to paying bond interest.

Paying Dividends Is More Expensive Than Paying Bond Interest Because