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Recall that in class we discussed how personal tax rates affect the marginal contribution of a dollar of debt to the value of the firm

Recall that in class we discussed how personal tax rates affect the marginal contribution of a dollar of debt to the value of the firm (prior to considering the effects of bankruptcy costs). Determine the marginal contribution of debt for the following combinations of personal tax rates on interest income (Tb), distributions to equity holders (Ts). and the corporate tax rate (Tc)

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