Under Miller and Modiglinai’s theory, business income taxes encourages business’s to take on debt instead of selling its equity. Which of the following is the reason why that would be the case?
Under Miller and Modiglinai’s theory, business income taxes encourages
business’s to take on debt instead of selling its equity. Which of the following is the reason why that would be the case?
A. Interest payments on debt is tax deductible
B. All of these answers
C. Dividends paid to shareholders are not tax deductible
D. The cost of capital decreases as the proportion of debt in the capital structure increases.
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