Which of the following represents the perfect capital

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26. Which of the following represents the perfect capital market view of capital structure?
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a. The value of the leveraged firm is equal to the value of the unleveraged firm plus the tax rate times the amount of debt. b. Corporate taxes cause debt to be cheaper than equity. c. Maximum firm value results from being essentially all-debt financed. d. none of these d 27. Which of the following represents the corporate tax view of capital structure? of capital, not on how those cash flows are divided between the debtholders and the shareholders. b 28. Which of the following represents the corporate tax view of capital structure? of capital, not on how those cash flows are divided between the debtholders and the shareholders. the tax rate times the amount of debt. b 29. Which of the following represents the personal tax view of capital structure? of capital, not on how those cash flows are divided between the debtholders and the shareholders. and personal income taxes. c 30. Which of the following represents the personal tax view of capital structure? a. Firm value depends only on its expected future operating cash flows and the cost of capital, not on how those cash flows are divided between the debtholders and the shareholders. b. Corporate taxes cause debt to be cheaper than equity. c. The differential between tax rates on personal income from equity and from debt cancels out the corporate tax asymmetry. d. a & b d 31. Which of the following represents the personal tax view of capital structure? cancels out the corporate tax asymmetry. and personal income taxes. investor as a before-tax dollar taxed at T and then taxed again at T e . d
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