Suppose that a company can direct $1 to either debt interest or capital gains for equity investors. If there were no personal taxes on capital gains, which of the following investors would not care how the money was channeled? (The marginal corporate tax rate is 21 percent.)
A) Investors paying personal tax of 17.5 percent
B) Investors paying personal tax of 21 percent
C) Investors paying personal tax of 53 percent
D) Tax-exempt personal investors
Correct Answer:
Verified
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