Question
Corporate After-Tax Yield The Shrieves Corporation has $25,000 that it plans to invest in marketable securities. It is choosing among AT&T bonds (which yield 5.7%),
Corporate After-Tax Yield
The Shrieves Corporation has $25,000 that it plans to invest in marketable securities. It is choosing among AT&T bonds (which yield 5.7%), AT&T preferred stock (with a dividend yield of 5.0%), and state of Florida muni bonds (which yield 4% but are not taxable). The federal tax rate is 21% (ignore any possible state corporate taxes). Recall that 50% of dividends received are tax exempt. Find the after-tax rates of return on all three securities after paying federal corporate taxes. Round your answers to three decimal places.
After-tax rate of return on AT&T bond: 4.50%
After-tax rate of return on AT&T preferred stock: ? %
After-tax rate of return on Florida muni bonds: 4%
How do I find the preferred stock/
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