Question 7 3 pts Assume the current corporate income tax rate is 35%. If the rat

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Question 7 3 pts Assume the current corporate income tax rate is 35%. If the rate were decreased to 15%, how would this impact the after-tax cost of debt? All else equal, would firms be more or less likely to issue debt as opposed to equity? After-tax cost of debt increases; firms are more likely to issue debt After-tax cost of debt decreases; firms are less likely to issue debt After-tax cost of debt increases; firms are less likely to issue debt After-tax cost of debt decreases; firms are more likely to issue debt O O

Explanation / Answer

After-tax cost of debt increases, firms are less likely to issue debt

the above is answer..

because debt issuance has tax deduction incentive, so if this benefit declines, the companies tend to issue less debt

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