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djverab [1.8K]
2 years ago
9

Typically, the firms' lowest cost source of financing is ____________ as its cost is tax deductible and it also tends to offer t

he least amount of risk for investors. Group of answer choices Debt Preferred Equity Derivatives Common Equity Equity
Business
1 answer:
Finger [1]2 years ago
6 0

Answer:

Debt

Explanation:

Debt is the lowest cost source of financing because the <em>interest</em> return given to holders of debt has a <em>tax shield</em> (tax deductible) that is provided by the Section 11j  of the Income tax Act.

The other sources of finance give a return in form of <em>dividends</em>. Dividends are are not tax deductible hence they attract a huge cost.

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Explanation:

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