Is cost of debt cheaper than cost of equity for a business?
Which would be cheaper for a business between cost of debt and cost of equity?
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Customarily, it should be the cost of debt as debt holders have less default risk than shareholders being that they are more senior as regards being claimants of the business. The business can further benefit from an interest tax shield because interest is in most cases, tax deductible, which lowers the "actual" interest expense before you get to net income