Assume that the firms gain from leverage according to the, Financial Management

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Assume that the firms gain from leverage according to the

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: $100,000 rd: 12% Tc: 30% Debt: $500,000 rsU: 16%

a)16.4%

b)18.2%

c)20.2%

d)22.5%

e)25.0%

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