What are public deposits ? Explain four merits of public deposit as a sources of business finance.
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✔️PUBLIC DEPOSITS :
➡️Public deposits refer to the unsecured deposits invited by companies from the public mainly to finance working capital needs. A company wishing to invite public deposits makes an advertisement in the newspapers.
✔️MERITS OF PUBLIC DEPOSITS
➡️ Acquisition of finance through public deposits is very easy.
➡️ Interest paid on public deposits is tax deductible expenditure.
➡️Administrative cost of issuing a public deposit is lower than the cost involved in issuing shares and debentures.
➡️Since the rate of interest paid on a public deposit is fixed, it helps the company play trading on equity.
➡️It does not dilute the control of shareholders.
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