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t/f: 1-When (1 - Tp) = (1 - TpE)(1 - Tc), the impact of corporate and personal taxes on the debt policy decision becomes less significant 2-Financing...
t/f:
1-When (1 - Tp) = (1 - TpE)(1 - Tc), the impact of corporate and personal taxes on the debt policy decision becomes less significant
2-Financing decisions in perfect capital markets have no impact on total firm value, and hence, capital structure is irrelevant.
3-The existence of personal taxes on interest income and equity income will always increase the advantage of debt to a firm
4-When taxes and the costs of financial distress are included, the value of a levered firm is given by---Value of levered firm = value of unlevered firm + PV (tax shield) - PV (costs of financial distress).
