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Equity versus Debt Financing Indicate whether each of the following relates to equity (E) or debt (D) financing and whether it makes that form of financing more, or less, favorable1.Interest is tax deductible.2. Dividends are optional.3.It must be repaid.4. Additional stock issuances dilute existing stockholders’ control

Sagot :

1) Debt: Debt is preferable to equity due to the deductibility of interest.

Capital 2)

Equity is more advantageous due to the discretionary nature of dividends.

3) Debt Is less beneficial when the principal must be repaid.

Four) Equity

Equity is less appealing than debt to current stockholders because of the dilutive effect of fresh stock issuances.

Any individual, business, or organization that owns at least one share of a company's stock or unit in a mutual fund is referred to as a shareholder. With certain rights and obligations, shareholders effectively own the business. They are able to benefit from a company's success thanks to this type of ownership.

These benefits take the form of rising stock prices or financial gains paid out as dividends. On the other hand, when a company experiences a loss, the share price always falls, which can result in financial losses for shareholders or declines in their portfolios.

Learn more about stockholders here

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