Abstract
First with no taxes and then with only a corporate tax we were able to arrive at well-defined conclusions. In the no-tax situation a firm’s cost of capital is not affected by the amount of debt. With the corporate income tax (and no investor taxes and no costs of financial distress) the conclusion is that a firm should issue as much debt as feasible and that the Internal Revenue Service will allow. In this chapter we introduce investor taxes and now the conclusions are not as exact. The conclusions will depend heavily on the specific assumptions for a given situation.
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© 2003 Springer Science+Business Media Dordrecht
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Bierman, H. (2003). Capital Structure Decision With Corporate and Investor Taxes. In: The Capital Structure Decision. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-1037-6_4
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DOI: https://doi.org/10.1007/978-1-4615-1037-6_4
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4613-5363-8
Online ISBN: 978-1-4615-1037-6
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