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Assume BJ Companies Is Indifferent Between Issuing Equity and Issuing

Question 5

Multiple Choice

Assume BJ Companies is indifferent between issuing equity and issuing debt.Assume the corporate tax rate is 21 percent and dividends are taxed at the personal level at 20 percent.What is the personal tax on interest income?


A) 20 percent
B) 42 percent
C) 40 percent
D) 14 percent
E) 37 percent

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