Which of the following is NOT an advantage for a firm of using equity rather than debt financing?
A)Lower cost.
B)Lower risk of insolvency.
C)Lower funding risks.
D)No legal liability to pay dividends.
E)No requirement to repay capital.

Question

Quizplus · Accepted Answer

Lower cost is not an advantage of using equity financing over debt financing. In fact, equity financing typically has a higher cost than debt financing because investors expect a higher return on their investment to compensate for the higher risk. The other options listed - lower risk of insolvency, lower funding risks, no legal liability to pay dividends, and no requirement to repay capital - are all advantages of using equity financing over debt financing.

Which of the Following Is NOT an Advantage for a Firm