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Recently the Corporate Tax Law in the U

Question 53

Multiple Choice

Recently the corporate tax law in the U.S.changed so that firms that previously faced a marginal tax rate of close to 40% now pay tax at a flat rate of 21%.Holding everything else constant,this reduction in the tax rate faced by corporations ________.


A) increased the after-tax cost of debt
B) decreased the after-tax cost of debt
C) did not change the after-tax cost of debt
D) increased the value of the deduction for interest expense

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