How does the relative tax advantage change

Reference no: EM13201801

What is the relative tax advantage of corporate debt if the corporate tax rate is Tc = .35, the personal tax rate is Tp = .35, but all equity income is received as capital gains and escapes tax entirely (TpE = 0)? How does the relative tax advantage change if the company decides to pay out all equity income as cash dividends that are taxed at 15%?

Reference no: EM13201801

Questions Cloud

What is the projects apv in the cases : Calculate the weighted-average cost of capital (WACC) for Federated Junkyards of America and what is the project's APV in the cases

What rent should the manager charge to maximize revenue : Similarly, one additional unit will be occupied for each 9 dollar decrease in rent. What rent should the manager charge to maximize revenue.

Increase the target person’s perception : Which tactic is most likely to increase the target person’s perception that a request or proposal is important for the team or organization

How budget constraint in a two-period model is affected : Describe how the budget constraint of a household in a two-period model is affected by each of the following changes. In Each Case, do you think the household is better off, or worse off, or is it ambiguous If ambiguous.

How does the relative tax advantage change : How does the relative tax advantage change if the company decides to pay out all equity income as cash dividends that are taxed at 15%?

Book- and market-value balance sheets : How much of the firm's value is accounted for by the debt-generated tax shield and how much better off will UF's shareholders be if the firm borrows $20 more and uses it to repurchase stock?

Humility action plan : One of the most important discussions in this chapter is practicing self-forgetfulness. Many cultures place a high value on achievement, appearance, and a strong self. In such a culture, it is important to cultivate humility.

How would such a tax affect the relative wage rate : Assume that capital and labor both exhibit diminishing marginal returns, so that capital can be substituted for labor in the production process (and vice versa), but capital and labor are not perfect substitutes. How would such a tax affect the rel..

Find the amount invested at each rate : Two investments are made totaling $8800. For a certain year these investments yielded $1326 in simple interest. Part of the $8800 was invested at 14% the part at 16%. Find the amount invested at each rate.

User Account

All Pages