Consider two firms, The Debt Corporation and the No Debt Corporation. Both companies are expected to have earnings before interest and taxes of $ 200,000 over the next year. Additionally, Debt is expected to incur $ 80,000 in interest expense as a result of its borrowing, while No Debt will incur no interest expense because it does not use debt financing. Both firms are in the 21 percent tax bracket. The tax liability of these companies is___________.

a. $ 80,000 Debt and $ 42,000 No Debt

b. $ 25,200 Debt and $ 42,000 No Debt

c. $ 120,000 Debt and $ 158,000 No Debt

d. $ 94,899 Debt and $ 124,800 No Debt