Why does ordinary share capital have a high cost relative to debt capital?

CPA-Financial-Management-Section-3 Revision kit

Ordinary share capital have a high cost relative to debt capital because:
– There is high uncertainty of dividends income unlike interest which is fixed.
– Dividends are not tax allowable unlike interest which provide tax shield.
– Owners of the provide take most risk providing equity capital hence they require a higher rate of return compared to other investors.
– Share prices are highly volatile and makes the value of equity uncertain and cost of equity high.

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