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EpiscoWhat EpiscoWhat
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Posts: 268
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6 years ago
Assume that the corporate tax rate is 40%, the personal tax rate on income from equity is 20% and the personal rate on interest income is 36%. The effective tax advantage of a corporate issuing debt would be closest to:
A) 10%
B) 15%
C) 25%
D) 28%
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
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Replies
wrote...
6 years ago
C
Explanation:  C) t* = 1 -   = 1 -   = 25%
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