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Assume that Lucas's marginal tax rate is 12 percent and his tax rate on dividends is 6 percent. If a dividend-paying stock (with no
Assume that Lucas's marginal tax rate is 12 percent and his tax rate on dividends is 6 percent. If a dividend-paying stock (with no growth potential) pays an 7.2 percent 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? Multiple Choice 12.00 percent 5.00 percent 7.20 percent 6.77 percent None of the choices are correct.
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