1) All else equal, which of the following statement(s) is(are) true from a tax standpoint, given current U.S. tax laws? Group of answer choices

a) The use of debt can result in lower taxes for the corporation, and interest income is taxed at preferred rates at the investor level

b)Although a firm is able to deduct both interest expense and dividend distributions in determining taxable income, investors prefer to receive dividend income since it is taxed at a lower rate c) Corporate tax liability is decreased with the use of debt, but interest income is not tax-advantaged to the investors

d)The tax-preferred financing method is the use of retained earnings since a firm does not pay any taxes on reinvested earnings, and capital gains are not taxed at the investor level until

2) Which of the following statements regarding current U.S. tax laws is true?

a)Only interest payments are tax deductible; dividends are paid out of after -tax income

b) Both dividend payments and interest payments are tax -deductible for a firm

c) Only dividend payments on preferred stock and interest payments on debt are tax-deductible for a firm

d) Only dividend payments are tax deductible; interest is never tax deductible