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PMF, Inc., can deduct interest expenses next year up to 30% of EBIT. This limit is equally likely to be $12 million, $20 million, or $28 million. Its corporate tax rate is 35%, and investors pay a 20% tax rate on income from equity and a 40% tax rate on interest income. a. What is the effective tax advantage of debt if PMF has interest expenses of $10 million this coming year? b. What is the effective tax advantage of debt for interest expenses in excess of $28 million? (Ignore carryforwards). c. What is the expected effective tax advantage of debt for interest expenses between $12 million and $20 million? (Ignore carryforwards). d. What level of interest expense provides PMF with the greatest tax benefit? a. What is the effective tax advantage of debt if PMF has interest expenses of $10 million this coming year? If PMF has interest expenses of $10 million this coming year, the effective tax advantage is %. (Round to one decimal place.) b. What is the effective tax advantage of debt for interest expenses in excess of $28 million? (Ignore carryforwards). For interest expenses in excess of $28 million, the effective tax advantage is % (Round to one decimal place.) c. What is the expected effective tax advantage of debt for interest expenses between $12 million and $20 million? (Ignore carryforwards). The expected effective tax advantage of debt for interest expenses between $12 million and $20 million is % (Round to one decimal place.) d. What level of interest expense provides PMF with the greatest tax benefit? (Select the best choice below.) O A. Up to $12 million O B. The interest expense does not matter because the tax benefit is always the same. O C. $12 million OD. $28 million and over O E. Between $12 million and $20 million

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