In Miller's Model, When the Quantity (1 - T_C)(1 -

question 72

Multiple Choice

In Miller's model, when the quantity (1 - T_C) (1 - Tp_E) = (1 - Tp) , then

• A)the firm should hold no debt.
• B)the value of the levered firm is greater than the value of the unlevered firm.
• C)the tax shield on debt is exactly offset by higher personal taxes paid on interest income.
• D)the firm should be financed by 100 percent equity.

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