Which of these is not an advantage of using borrowed funds to finance a business?
A)Interest on borrowings is tax deductible.
B)Borrowing can be used to boost returns to owners, as long as the return on the funds exceeds the cost of interest.
C)Lenders do not dilute ownership interest in the business.
D)Interest on borrowing is a legal commitment that must be met.

Question

Quizplus · Accepted Answer

Interest on borrowing is a legal commitment that must be met, which means that the borrower must pay back the borrowed funds and the interest, regardless of the financial performance of the business. This can be a disadvantage as it creates financial obligations and reduces the flexibility of the business.

Which of These Is Not an Advantage of Using Borrowed