Suppose That a Company Can Direct $1 to Either Debt

question 63

Multiple Choice

Suppose that a company can direct $1 to either debt interest or capital gains for equity investors.If there were no personal taxes on capital gains, which of the following investors would not care how the money was channeled? (The marginal corporate tax rate is 35 percent.)

• A)Investors paying personal tax of 17.5 percent
• B)Investors paying personal tax of 35 percent
• C)Investors paying personal tax of 53 percent
• D)Tax-exempt personal investors

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Definitions:

Share Power

The distribution of power among different groups or individuals in a way that is more equitable and allows for shared decision-making.

Magical Negro

A cinematic trope where a black character, often with supernatural powers, comes to the aid of white protagonists, usually without benefiting themself.

Caricature

An exaggerated representation of a person or group, typically used for satirical or comedic purposes, but can perpetuate stereotypes and misinformation.

Dehumanizes

The act of depriving a person or group of their human qualities, dignity, or individuality.