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how is t*= tc because when i sold this i get t*= -tc maybe im not understanding a relationship between the variables? Effective Tax Advantage
how is t*= tc because when i sold this i get t*= -tc maybe im not understanding a relationship between the variables?
Effective Tax Advantage of Debt (1 T;) (1 T.)(1 Te) (1 T.)(1 Te) T* = = 1 (15.7) (1 T;) (1 T;) When there are no personal taxes, or when the personal tax rates on debt and equity income are the same (T;= Te), this formula reduces to 7* = Tc. But when equity income is taxed less heavily (T;> Te), then 7* is less than TeStep by Step Solution
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