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Assume the Miller Model with corporate holds. Fill in the cells in the table below for three different corporations that have different tax rates. The
Assume the Miller Model with corporate holds. Fill in the cells in the table below for three different corporations that have different tax rates. The first column for each firm gives the data if it is unlevered; the second column gives data if it is levered. Assume now that there are personal taxes. Assume investors are taxed at a rate of 20% on equity income and 45% on debt income. E is the market value of the firm's equity, D is the market value of the firm's debt, and V is the total value of the firm. Using the data from 1, determine what the personal tax rate on debt income must be for Company 1 to be indifferent between debt and equity financing. Assume the Miller Model with corporate holds. Fill in the cells in the table below for three different corporations that have different tax rates. The first column for each firm gives the data if it is unlevered; the second column gives data if it is levered. Assume now that there are personal taxes. Assume investors are taxed at a rate of 20% on equity income and 45% on debt income. E is the market value of the firm's equity, D is the market value of the firm's debt, and V is the total value of the firm. Using the data from 1, determine what the personal tax rate on debt income must be for Company 1 to be indifferent between debt and equity financing
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