Why do companies often prefer debt financing to other forms of financing for capital investments? a. Actually, they don't prefer debt financing. They usually try to use retained earnings for capital investments. b. Because bond holders are happy to just break even on their bonds. c. Because the MARR all but guarantees the projects will return yields greater than the interest on the loans. d. Because debt interest is tax deductible, reducing significantly the actual cost of borrowing money for projects.
Why do companies often prefer debt financing to other forms of financing for capital investments? a. Actually, they don't prefer debt financing. They usually try to use retained earnings for capital investments. b. Because bond holders are happy to just break even on their bonds. c. Because the MARR all but guarantees the projects will return yields greater than the interest on the loans. d. Because debt interest is tax deductible, reducing significantly the actual cost of borrowing money for projects.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Why do companies often prefer debt financing to other forms of financing for capital
investments?
a. Actually, they don't prefer debt financing. They usually try to use retained
earnings for capital investments.
b. Because bond holders are happy to just break even on their bonds.
c. Because the MARR all but guarantees the projects will return yields greater than
the interest on the loans.
d. Because debt interest is tax deductible, reducing significantly the actual cost of
borrowing money for projects.
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