MP Board · Class 11 · Business Studies · Sources of Business FinanceWhich of the following offers the advantage of tax-saving on interest payments?
Step-by-Step Solution
Interest paid on borrowed funds like debentures and loans is a tax-deductible expense, reducing the overall tax liability of the company, unlike dividends paid on shares.
Detailed Options Breakdown
Option : Equity Shares
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Sources of Business Finance.
Option 1: Preference Shares
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Sources of Business Finance.
Option 2: Debentures (Correct Answer)
Correct choice. Refer to the step-by-step verified solution guidelines above for details.
Option 3: Retained Earnings
Incorrect choice. This distractor represents a common misunderstanding of the core principles of Sources of Business Finance.
💡 Study Guide: This question tests core syllabus concepts from Sources of Business Finance. For formulas, key summaries, and mock exam reference guides, read the full Sources of Business Finance Revision Notes.