Question
Assume that Lucas' marginal tax rate is 10% and his tax rate on dividends is 5%. If a dividend-paying stock (with no growth potential) pays
Assume that Lucas' marginal tax rate is 10% and his tax rate on dividends is 5%. If a dividend-paying stock (with no growth potential) pays an 8.80% dividend yield, what interest rate would a municipal bond have to offer for Lucas to be indifferent between the two investments from a cash-flow perspective?
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Financial Accounting International Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel
6th Edition
978-0470623275
