Generally, debt is cheaper than equity from the issuer’s perspective.
For the issuer, debt is cheaper because:
- Debt holders take less risk and therefore require a lower return.
- Interest payments are usually tax-deductible, which creates a tax shield and further reduces the effective cost of debt.
- Equity investors take more risk because they are residual claimants, so they require a higher return.
The trade-off for the issuer is that although debt is cheaper, it creates a mandatory financial obligation. Equity is more expensive, but it doesn't require mandatory payments or repayment of the capital. This is why companies don't simply finance everything with debt; they try to find an optimal mix of debt and equity that balances the tax benefits of debt against the financial risk it creates
~ In case you didn’t know, I started a cleaning & fumigation business. 👀
Post-construction? We clean it.
House? We clean it.
Office? We clean it.
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No carry my work go outside abeg. 😭🤲🏽
@HEssentia@Aderayo_aare Arrest on what basis please?
Did she do anything wrong?
She only pointed out the child’s resemblance, is there something to it?