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Author Question: Suppose the corporate tax rate is 37%, personal tax rate on interest income is 12%, and personal tax ... (Read 425 times)

lol1012

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on: Aug 7, 2023

Question 1

Suppose that the personal tax rate on income from bonds is 37%, and the personal tax rate on income from stocks is 25%. What is the critical corporate tax rate below which leverage will add no value to the unlevered firm per dollar of debt?

◦

13.0%


◦

14.8%


◦

15.5%


◦

16.0%



Question 2

Suppose the corporate tax rate is 37%, personal tax rate on interest income is 12%, and personal tax rate on equity income is 45%. How much value will leverage add to the unlevered firm per dollar of debt?

◦

$0.502


◦

$0.540


◦

$0.606


◦

$0.693

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Marked as best answer by lol1012 on Aug 7, 2023

studyforce.com

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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lol1012

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Reply 2 on: Aug 7, 2023
Great answer, keep it coming :)

Sarahjh

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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