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Mantle Corporation is considering two equally risky investments: A $5,000 investment in preferred stock that yields 7.15%. A $5,000 investment in a corporate bond that
Mantle Corporation is considering two equally risky investments: A $5,000 investment in preferred stock that yields 7.15%. A $5,000 investment in a corporate bond that yields 10.00%. What is the breakeven corporate tax rate that makes the company indifferent between the two investments? Assume a 50.00% dividend exclusion for tax on dividends. (Do not round your intermediate answer and round your final answer to two decimal places.) a. 33.27% b. 44.36% c. 42.58% d. 39.48% e. 43.47%
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