Bavarian Brew, an unlevered firm, has an expected EBIT of $$500,000.$ The required return on assets for the firm$$s assets is $10\%.$ The company has $250,000$ shares outstanding. The company is considering raising $$1$ million in debt with a required return of $6\%$ and would use the proceeds to repurchase outstanding stock.

Refer to Bavarian Brew. If the corporate tax rate equals $34\%$ and dividend income is tax free, at which personal tax rate on interest income is there no gain from leverage?

Group of answer choices

$15\%$

$34\%$

$40\%$

$0\%$