For every dollar of operating income paid out as interest, the bondholder realizes A)(1 - Tp). B)(1 - Tp_E) (1 - T_C). C)(1 - T_C). D)1/(1 - T_C).

Name: For every dollar of operating income paid out as interest, the bondholder realizes A)(1 - Tp). B)(1 - Tp E ) (1 - T C ). C)(1 - T C ). D)1/(1 - T C ).
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The bondholder realizes (1 - Tp) of every dollar of operating income paid out as interest because the interest payment is tax-deductible for the corporation.

For Every Dollar of Operating Income Paid Out as Interest