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What is the relative tax advantage of debt? Assume that personal and corporate taxes are given by: TC = (corporate tax rate) = 21 percent;
What is the relative tax advantage of debt? Assume that personal and corporate taxes are given by: TC = (corporate tax rate) = 21 percent; TpE = personal tax rate on equity income = 15 percent; and Tp = personal tax rate on interest income = 37 percent.
A) 0.94
B) 1.16
C) 1.35
D) 0.86
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