Use the Table for the Question(s)below

question 3

Multiple Choice

Use the table for the question(s) below.
Consider the following historical top federal tax rates in the United States:
Personal Tax Rates
-In 2005,assuming an average dividend payout ratio of 50%,the effective tax advantage for debt (τ*) was closest to:

• A)24%.
• B)18%.
• C)35%.
• D)15%.

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Definitions:

Disabled Employee

An employee who has a physical or mental impairment that substantially limits one or more major life activities.

Minimum Period

The shortest allowable or required duration for a particular action, event, or condition to take place or remain in effect.

Consolidated Omnibus Budget Reconciliation Act

A federal law providing individuals and their families the option to continue health care coverage under their group health plan in certain instances where coverage would otherwise end.

Social Security Act

A law enacted in 1935 to create a system of transfer payments in which younger, working people support older, retired people.