If there are no market imperfections except for corporate income taxes, what should the firm's optimal capital structure be?

2. From an income tax perspective, what kind of investments should a high-net-income investor hold? What should a tax-exempt pension fund hold?

3. From a joint income tax perspective, how should a high-tax value firm be financed? How should a low-tax growth firm be financed?

4. An individual earned $75,000 of taxable income from wages, $10,000 of interest income, and $12,000 of dividend income. Her tax rate is 30% on ordinary income and 15% on dividend income. How much does she owe in taxes?

5. Describe and briefly discuss the indirect costs associated with financial distress.

6. How can too much free cash flow be problematic? Explain how a firm might establish a dividend policy that could minimize this concern

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