How influential are corporate and personal taxes on capital structure? Historically, have changes in American tax rates greatly affected debt ratios?
Answer to relevant QuestionsHow do stock prices generally react to announcements of firms’ changes in leverage? Why is this result perplexing and seemingly contradictory? Assume that capital markets are perfect. A firm finances its operations with $50 million in stock, with a required return of 15 percent, and $40 million in bonds with a required return of 9 percent. Assume the firm could ...Intel Corp. is a firm that uses almost no debt and had a total market capitalization of about $179 billion in April 2004. Assume that Intel faces a 35 percent tax rate on corporate earnings. Ignore all elements of the ...Slash and Burn Construction Company currently has no debt and expects to earn $10 million in net operating income each year, for the foreseeable future. The required return on assets for construction companies of this type ...What impact has adoption of Rule 144A had on debt-issuance patterns in the United States?
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