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| 1. |
Merits of debentures |
| Answer» 1) Investors who want fixed income at lesser risk prefer them.2) As a debenture does not carry voting rights, financing through them does not dilute control of equity shareholders on management.3) Financing through them is less costly as compared to the cost of preference or equity capital as the interest payment on debentures is tax deductible.4) The company does not involve its profits in a debenture.5) The issue of debentures is appropriate in the situation when the sales and earnings are relatively stable.<br>1st long term loan 2nd small loats loan 3rd. Tax advantages | |