3. (5 points) We showed that with corporate and personal income taxes affect the gain from leverage. Using the variables defined below, answer the following questions. V = value of the levered firm = value of the unlevered firm Vu EBIT D F Ta = = = = operating earnings before interest and taxes market value of the debt face value of the debt before tax return on debt = return on unlevered equity Ta = = corporate tax rate personal tax rate on interest income =_effective personal tax rate on equity income (1) Under what condition will G = tD? How can this happen? (2 points) (2) Under what condition will G =0? Discuss what your condition implies for the relative magnitudes of corporate and personal tax rates, if t, td, and Te are all greater than zero. (3 points)