14.What one advantage does a debt security have over equity security?
Debt and Equity are the popular ways of financing the entity. Debt issue enables the company to pay amount of interest and principal even in cash strapped times.Both of them have their own advantages and disadvantages. Debt security creates an obligation on the company to pay the interest cost which is not such in the case of Equity.
However, there are certain advantages to issuing debt over equity security:
1.The interest payment made on Debt is tax deductible. For example: If we have issued debt for $1,000,000 @ 12%, then we will be paying interest of $120,000 per annum. This payment translates into a tax benefit of $36,000 (if tax rate is 30%). There is no such benefit in equity.
2. Issuing debt raises the obligation to pay interest and principal but There is no dilution in control as compared to equity. In Equity issue, the ownership gets diluted due to additional owners being added every time of issue.
14.What one advantage does a debt security have over equity security?
Does monetary policy have an advantage over fiscal policy?
1) What advantages does financing with bonds provide over equity? 2) What disadvantages does financing with bonds have vs equity? 3) What is "leverage"? 4) What types of debt are available to finance a business? 5) What conditions must exist for a company to issue bonds at a "premium"?. 6) What conditions must exist for a company to issue bonds at a "discount"?
1. What is the difference between valuing a debt security and valuing the equity of a company? Explain 2. Assume interest rate on a company's debt is 6% and that the company's tax rate is 35%. Compute the cost of debt capital. Show your calculation. 3. Assume that a company's market beta equals 0.8, the risk-free rate is 5%, and the market return equals 8%. Compute the company's cost of equity capital. Show your calculation.
What advantage does a metagenomics approach have over a culture-dependent approach when trying to determine the bacterial density in a complex environmental sample? List 4 environmental properties that can have a significant impact on the growth of a bacterial species. List 3 environmental conditions that might trigger endospore formation? Please provide written answer for the questions. Thank you
a.) What is one advantage of having a cambered airfoil over a flat plate? b.) What is one advantage of having an airfoil with thickness over a flat plate?
What does Brazil have an absolute advantage in?
The advantage in the production of a product enjoyed by one country over another when it uses fewer resources to produce that product than the other country does is a comparative advantage. a productive advantage. a relative advantage. an absolute advantage.
Which one of the following is a type of equity security that has a fixed dividend and a priority status over other equity securities?
What advantage does a state have in charging a relatively high state sales tax? In contrast, what advantage does a state have in charging relatively low (or no) sales tax? If one state has a high sales tax and the state next door has a low sales tax, would that affect your answer to the first two questions?
Preferred stock can best be characterized as: Equity Debt Retained Earnings A security that pays a fixed dividend like debt, but is subject to non payment like equity. A preferred shareholder cannot force a firm into bankruptcy if the firm fails to pay the dividend.