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LeBron James Corporation is considering two equally risky investments. The first investment is a preferred stock that yields 1 3 % , and the second

LeBron James Corporation is considering two equally risky investments. The first

investment is a preferred stock that yields

13 %,

and the second is a corporate bond th

yields

16 % .

What is the breakeven corporate tax rate that makes LeBron indifferent

between the two investments?

10

points

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