Calculate the after-tax return of a 4.65 percent, 20-year, A-rated corporate bond for an investor in the
Question:
Calculate the after-tax return of a 4.65 percent, 20-year, A-rated corporate bond for an investor in the 10 percent marginal tax bracket. Compare this yield to that of a 3.25 percent, 20-year, A-rated, tax- exempt municipal bond, and explain which alternative is better. Repeat the calculations and comparison for an investor in the 25 percent marginal tax bracket.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 71% (7 reviews)
Use the following formula Aftertax return taxable r...View the full answer
Answered By
Salmon ouma
I am a graduate of Maseno University, I graduated with a second class honors upper division in Business administration. I have assisted many students with their academic work during my years of tutoring. That has helped me build my experience as an academic writer. I am happy to tell you that many students have benefited from my work as a writer since my work is perfect, precise, and always submitted in due time. I am able to work under very minimal or no supervision at all and be able to beat deadlines.
I have high knowledge of essay writing skills. I am also well conversant with formatting styles such as Harvard, APA, MLA, and Chicago. All that combined with my knowledge in methods of data analysis such as regression analysis, hypothesis analysis, inductive approach, and deductive approach have enabled me to assist several college and university students across the world with their academic work such as essays, thesis writing, term paper, research project, and dissertation. I have managed to help students get their work done in good time due to my dedication to writing.
5.00+
4+ Reviews
16+ Question Solved
Related Book For
Personal Finance Turning Money into Wealth
ISBN: 978-0134730363
8th edition
Authors: Arthur J. Keown
Question Posted:
Students also viewed these Business questions
-
1. Calculate the after tax salvage value at the end of year 5. 2. Calculate the operating cash flows at the end of year 1. 3. Calculate the initial cash outflow (e.g. the time 0 cash flow). 4....
-
An investor is in the 28 percent income tax bracket and can earn 6.3 percent on a nontaxable bond. What is the comparable yield on a taxable bond? If this same investor can earn 8.9 percent on a...
-
An investor in the 35 percent tax bracket may purchase a corporate bond that is rated double A and is traded on the New York Stock Exchange (the bond division). This bond yields 9.0 percent. The...
-
Midland Corporation has a net income of $19 million and 4 million shares outstanding. Its common stock is currently selling for $48 per share. Midland plans to sell common stock to set up a major new...
-
Show that S ª Tc = Sc © Tc (S © T)c = Sc ª Tc Set union and intersection have straightforward extensions to collections of sets. The union of a collection C of sets U S={x : x S...
-
One of the reasons for the declining number of trials, despite increasing disputes, may be difficulty in affording a lawyer in civil suits. The New York Times and other publications have reported an...
-
During 2015, The Mann Corporation borrowed \($500,000\) from The Biltmore National Bank. The loan agreement included a debt covenant restricting the companys level of debt relative to shareholders...
-
Colleen Matthews had just turned 22 when her hard work finally started to pay off. Six months earlier, Colleen had graduated from a state university with a masters degree in accounting. Colleen...
-
Susan is taking out a mortgage for $241,000 to buy a new house and is deciding between the offers from two lenders. She wants to know which one would be the better deal over the life of the mortgage...
-
An autopilot designed to hold an aircraft in straight and level flight is shown in Figure CP5.7. (a) Suppose the controller is a constant gain controller given by Gc(s) = 2. Using the Isim function,...
-
Assuming a 1-year money market account investment at 1.5 percent (APY), a 2.5 percent inflation rate, a 25 percent marginal tax bracket, and a constant $50,000 balance, calculate the after-tax rate...
-
Aliza Grajek is a self-employed nurse with 2017 gross income of $68,000 and taxable annual income (federal and state) of $55,000 after adjustments, exemptions, and deductions. Calculate her total...
-
A random sample of 10 students was selected from the senior class at each of four large high schools, and the score of each of these 40 students on a certain mathematics examination was observed....
-
Madox Max Ltd pay a dividend of $3.3 per share next year. After that the dividend is forecast to grow at 15% for 1 year. From year three onwards dividends are expected to grow by 6% indefinitely....
-
Question 1.1 Identify the following components of the Australian Core Skills Framework (ACSF): The five (5) core skills; Their respective indicator numbers; and A description of each indicator. Core...
-
On January 1, 2024 , Stone leased an office building . terms of the lease require stone to make 15 annual lease payments of $135,000 beginning on leased an office building. Terms of the lease...
-
Suppose a 20-year Treasury bond with 5% semiannual coupon is currently traded at a yield of 6% (APR). 1) Is the price above or below 100? 2) What is the current price of the bond? 3) If the yield...
-
Suppose the exchange rate between U.S. dollars and Swiss francs is CHF 0.92 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 0.84 euro. What is the cross rate of Swiss...
-
John died in 2017. What amount, if any, was included in his gross estate in each of the following situations: a. In 1997, John created a revocable trust, funded it with $400,000 of assets, and named...
-
After looking at the resources, explain what a spirit image is. Why might looking at a god and/or a human in terms of their spirit be helpful if you want to eliminate some of the divisions between...
-
How does dividend policy affect the need for capital?
-
Define the term cost of capital. How would cost of capital be used in an investment decision?
-
Identify and describe the three basic theories used to explain the term structure of interest rates.
-
What is the current value of a perpetual bond from the Limited if you know the current interest rate is 12.42% and the annual interest payment is $1.35.
-
Income The graph below shows the median income of households in the United States from 2011 to 2021. A household income (or family income) is the total income of all people living in the household....
-
Wildcat Sporting Goods (WSG) sells athletic shoes and trendy sports apparel to a variety of sporting goods stores in the Northeast and, in 2011, WSG also began direct internet sales to consumers....
Study smarter with the SolutionInn App