Given a situation where the corporate tax rate is 34%, and the personal tax rate on...
Given a situation where the corporate tax rate is 34%, and the personal
tax rate on dividends is 28%, what must the personal tax rate on interest
be to achieve the Miller Model equilibrium (i.e. where V = Vu)?
Homework Answers
Asnwer:
GIven
Corporate tax Tc=34%
Dividend tax Tp =28%
Let Td be the tax on interest
(1-Td/(1-Tc)=(1-Tp)
1-Td=(1-28%)*(1-24%)
Td=52.48%
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