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Preferred stock is incorrect but the rest are good. The Omega Corporation has some excess cash it would like to invest in marketable securities for

Preferred stock is incorrect but the rest are good.

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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 6 percent yield; (b) corporate bonds at a 11 percent yield; or (c) preferred stock at an 8 percent yield. Omega Corporation is in a 40 percent tax bracket and the tax rate on dividends is 10 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 3.60 % 6.60 % 7.20 %

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