1. An important difference between interest paid by a corporation and dividends paid for a corporation is that:

a. Interest paid is tax-deductible, while dividends paid are not.

b. Dividends paid are tax-deductible, while interest paid is not.

c. Long-term interest is tax-deductible, while dividends paid and short-term interest paid are not.

d. Corporations rarely pay dividends, while they frequently pay interest.

2. This is the amount of additional taxes a firm must pay out for every additional dollar of taxable income it earns.

a. progressive tax system

b. average tax rate

c. earnings before tax

d. marginal tax rate