a. If an investor can earn 0.08 by investing in tax-exempt bonds, a corporation investing in comparable
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a. If an investor can earn 0.08 by investing in tax-exempt bonds, a corporation investing in comparable risk investments would have to earn what minimum return(s) after corporate tax to justify retention? Assume that the investor is in a 0.55 tax bracket for ordinary income and that all income from the corporation will be received in the form of cash dividends.
b. If new capital is raised and if the investment banker takes 0.10 of the price paid by the investors, the investment made by the corporation must earn ___________ after corporate tax.
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An Introduction To Accounting And Managerial Finance A Merger Of Equals
ISBN: 9789814273824
1st Edition
Authors: Harold JR Bierman
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