Question
An investor recently purchased a corporate bond which yields 10.5%. The investor is in the 36% combined federal and state tax bracket. What is the
An investor recently purchased a corporate bond which yields 10.5%. The investor is in the 36% combined federal and state tax bracket. What is the bond's after-tax yield? Round your answer to two decimal places
Corporate bonds issued by Johnson Corporation currently yield 11%. Municipal bonds of equal risk currently yield 6.5%. At what tax rate would an investor be indifferent between these two bonds? Round your answer to two decimal places.
Molteni Motors Inc. recently reported $3.25 million of net income. Its EBIT was $6 million, and its tax rate was 35%. What was its interest expense? Round your answer to the nearest dollar. (Hint: Write out the headings for an income statement and then fill in the known values. Then divide $3.25 million net income by 1 - T = 0.65 to find the pretax income. The difference between EBIT and taxable income must be the interest expense. Use this procedure to work some of the other problems.) Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000.
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