Corporate financing comes from sources either equity (E) or from debt (D).

Each source has attributes that make it either more favorable (MF) or less favorable (LF) than other sources.

For each attribute below, label it by source (E or D) and whether this attribute makes it more favorable or less favorable (MF or LF) than the alternative source of financing.

____ ____ 1. Interest is tax deductible.

____ ____ 2. Dividends are optional.

____ ____ 3. It must be repaid.

____ ____ 4. Additional issuances dilute stockholders control.