Question

The disadvantages of debt to the corporation include all but which of the following?

A. Debt may be paid back with "cheaper" dollars.
B. Interest and principal payments must be met regardless of performance results.
C. Indenture agreements may place burdensome restrictions on the firm.
D. Too much debt may depress the firm's stock price.

Answer 1

A. Debt may be paid back with "cheaper" dollars.

Step-by-step explanation:

During inflation, the market interest rate goes up, thus in that case debt benefits company as it has to pay interest on the rate decided during non inflation period. Thus this is not disadvantage of debt .