the personal tax on interest payment is 28%. The personal tax rate on equity capital gain is 10%. The corporate tax is 15%. Given all these text rates and all other factors are kept constant, will investors have a preference to debt or equity?

option 1 : cannot determine form the information provided

option 2: m-m proposition I holds and the investors are indifferent between debt and equity

option 3:Equity is preferred to debt

option 4::debt is preferred to equity