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Implied personal tax rate on debt income

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Assume that the firm's gain from leverage according to the Miller model is $126,667. If the effective personal tax rate on stock income is TS = 20%, what is the implied personal tax rate on debt income? If the following is true:

EBIT: $100,000rd: 12%Tc: 30%

Debt: $500,000rsU: 16%

  • 16.4%
  • 18.2%
  • 20.2%
  • 22.5%
  • 25.0%

Reference no: EM131318081

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