Choice "C" is correct. Debt is generally the least expensive component of a company's capital structure. Debt typically commands a lower return than equity since debt contemplates a full return of principal over a specific period compared to equity that has no such guarantee and exposes the investor/creditor to lower risks. In addition, interest payments on debt are tax deductible, creating a tax shield for the debtor company. Lower rates reduced further by a tax shield give debt an advantage over equity financing.
Choice "b" is incorrect. Financial leverage presumes higher returns and earnings per share (EPS) as a result of issuing debt. Presuming increased net income because of the debt financed investment; EPS will increase since the number of shares issued and outstanding (the denominator) will not increase.
Choice "a" is incorrect. There is greater financial risk when debt is used, but this is not an advantage. Choice "d" is incorrect. The use of debt financing does not decrease control of the company. The use of equity financing decreases control of the company.
