If Congress Were to Pass a Law Allowing Only Half

question 32

Multiple Choice

If Congress were to pass a law allowing only half a firm's interest expense to be tax deductible, how would this affect the relative value of firms, all else equal?

• A)It would increase the value of firms with lower marginal tax rates the most.
• B)It would affect only the net income, not firm value.
• C)It would decrease the value of firms with higher marginal tax rates the most.
• D)It would increase the value of firms with higher marginal tax rates the most.

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The environmental conditions and factors that influence living organisms and ecological systems.

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