What Is the Relative Tax Advantage of Debt? Assume That

question 24

Multiple Choice

What is the relative tax advantage of debt? Assume that personal and corporate taxes are given by T_C = (corporate tax rate) = 35 percent; Tp_E = personal tax rate on equity income = 30 percent; and Tp = personal tax rate on interest income = 20 percent.

• A)1.76
• B)1.16
• C)1.35
• D)0.86

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Tangible Property

Physical assets that can be seen, touched, and valued, such as real estate, equipment, or goods.

Perennial Vegetation

Plants that live for more than two years, providing long-term coverage and stability to the area in which they are grown, often used in sustainable agriculture and landscaping.

Quarried Marble

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