Question: Use the table for the question(s) below. Consider the following historical top federal tax rates in the United States: Personal Tax Rates Year Corporate Tax

Use the table for the question(s) below. Consider the following historical top federal tax rates in the United States:

Personal Tax Rates
Year Corporate Tax Rate Interest Income Dividends Capital Gains
2000 35% 40% 40% 20%
2005 35% 35% 15% 15%

In 2000, assuming an average dividend payout ratio of 50%, the effective tax advantage for debt (t*) was closest to:

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