The Introduction of Personal Taxes May Reveal a Disadvantage to the Use

Multiple Choice

The introduction of personal taxes may reveal a disadvantage to the use of corporate debt if the personal tax rate on:

A) the distribution of income to stockholders is less than the personal tax rate on interest income.
B) the distribution of income to stockholders is greater than the personal tax rate on interest income.
C) the distribution of income to stockholders is equal to the personal tax rate on interest income.
D) interest income is zero.
E) dividends and interest are equal.