The effect of a decrease in the corporate tax rate

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Reference no: EM131247305

Given a world with corporate taxes, rc , a personal tax rate paid on bonds, TpB , and a personal tax rate on income from equity, T ps, what would be the effect of a decrease in the corporate tax rate on

a) the aggregate amount of debt in the economy, and

b) the optimal capital structure of firms?

Reference no: EM131247305

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