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Mathematics, 20.04.2020 20:28 mem81

Haricot Corp. and Pinto Corp. both have operating profits of $150 million. Haricot is financed solely by equity, while Pinto has issued $200 million of 6% debt. If the corporate tax rate is 30%:

Required:

a. How much tax does each company pay?
b. What is the total payout to investors (debtholders plus shareholders) of each company?

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