The first term in Equation (7) is the marginal expected tax benefit of debt, while the second term is the marginal tax premium firms expect to pay bondholders. When debt is risky, the marginal expected tax benefit of debt is the corporate tax rate (tc) times the probability that the firm will keep its promise to the bondholders [1 -F(Y)]. Equation (7) shows that firms will issue debt up to the point where the marginal tax premium they expect to pay bondholders, [1 - F(Y)] tpb, is equal to the marginal expected tax benefit of debt, [1 - F(Y)]tc. Firms in the economy will continue to issue debt until, due to the progressivity of the personal tax schedule, tpb equals tc. Thus, in equilibrium the net tax advantage of debt is zero. Question : Model: Explain the model established in equation 7.