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What is the implied personal tax rate on debt

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Problem 1: The Berry Company has $500,000 of perpetual debt outstanding. According to the Miller Model, the gains from leverage the firm experiences is $170,588. If the effective personal tax rate on stock income is 20 percent, and if the corporate tax rate is 30 percent, what is the implied personal tax rate on debt income?

Group of answer choices

Option A) 35 percent

Option B) 15 percent

Option C) 22 percent

Option D) 12 percent

Option E) 24 percent

Reference no: EM132746268

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