Debt is generally the least expensive source of capital. This is ...

[geoffrey]

Debt is generally the least expensive source of capital. This is primarily due to ________.
 
  A) the fixed interest payments
  B) the priority of claims on assets and earnings in the event of liquidation
  C) the tax deductibility of interest payments
  D) the secured nature of a debt obligation

Question 2

The approximate after-tax cost of debt for a 20-year, 7 percent, 1,000 par value bond selling at 960 (assume a marginal tax rate of 40 percent) is ________.
 
  A) 4.43 percent
  B) 5.15 percent
  C) 7 percent
  D) 7.35 percent

[cloudre37]

Answer to Question 1

C

Answer to Question 2

A