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Why debt is cheaper than equity

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Why debt is cheaper than equity

Posted by Nifat Khan 7 years, 1 month ago

CBSE > Class 12 > Business Studies

3 answers

Jnv Vines 7 years, 1 month ago

Because it is compulsory to pay the amt. Of debt n returns but in case of equity,when company earns the profit,then they will distribute the profits furtner there is no payment to his shareholders.So,this is the reason company prefer to the equity not to be debt ..

Rahul Jain 7 years, 1 month ago

Because in debts there are less glotation cost involved

Vansh Rastogi 7 years, 1 month ago

Because returns on debts are regular and they are assured of regular returns unlike equity

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