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a. What is the relative tax advantage of corporate debt if the corporate tax rate is Tc=0.22, the personal tax rate is Tp=0.10, but all
a. What is the relative tax advantage of corporate debt if the corporate tax rate is Tc=0.22, the personal tax rate is Tp=0.10, but all equity income is received as capital gains and escapes tax entirely (TpE=0 )? (Do not round intermediate calculations. Round your answer to 4 decimal places.) b. How does the relative tax advantage change if the company decides to pay out all equity income as cash dividends that are taxed at 12% ? (Do not round intermediate calculations. Round your answer to 4 decimal places.)
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