7. Tax shields (S17-1) Suppose that Congress sets the top personal tax rate on interest and dividends

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7. Tax shields (S17-1) Suppose that Congress sets the top personal tax rate on interest and dividends at 35% and the top rate on realized capital gains at 15%. The corporate tax rate stays at 21%. Compute the difference between the total corporate plus personal taxes paid on debt and the total taxes on equity income if

(a) all capital gains are realized immediately and

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Principles Of Corporate Finance

ISBN: 9781264080946

14th Edition

Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans

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