In Miller's Model, When the Quantity (1-T_c)(1-T_s) = (1-T_b), Then

question 6

Multiple Choice

In Miller's model, when the quantity (1-T_c) (1-T_s) = (1-T_b) , 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 tax shield on debt is exactly offset by higher levels of dividends.
• E) the tax shield on debt is exactly offset by higher capital gains.

---

Definitions:

Inequality

The unequal distribution of wealth, resources, or opportunities among individuals or groups within a society.

Rawls

Refers to John Rawls, an American political philosopher known for his theories of justice and "the veil of ignorance."

Morality of Principles

Involves ethical decision-making based on abstract, universal principles such as justice, equality, and respect for individual rights, rather than on personal or societal consequences.

Rawls

A philosopher known for his theory of justice which proposes principles of justice to structure society, emphasizing fairness and equality.