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Problem 17-17 Aftertax comparison of preferred stock and other investments [LO17-5]

The Omega Corporation has some excess cash it would like to invest in marketable securities for a long-term hold. Its Vice-President of Finance is considering three investments: (a) Treasury bonds at a 9 percent yield; (b) corporate bonds at a 14 percent yield; or (c) preferred stock at an 10 percent yield. Omega Corporation is in a 30 percent tax bracket and the tax rate on dividends is 15 percent. a-1. Compute the aftertax yields for the three investment options. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)

		Aftertax yields
a.	Treasury bonds		%
b.	Corporate bonds		%
c.	Preferred stock		%