Baghiben Problem 31-38 After-tax yieldsSuppose you are a wealthy individual paying 35% tax on income. What is the expected after-tax yield on each of the followinginvestments?a. A municipal note yielding 7.6% pretax.b. A Treasury bill yielding 11.6% pretax.c. A floating-rate preferred stock yielding 8.1% pretax.How would your answer change if the investor is a corporation paying tax at 35%?Note: For all requirements, do not round intermediate calculations. Round your answers to 4 decimal places.× Answer is complete but not entirely correct.IndividualCorporationa. After-tax yield on Municipal noteb. After-tax yield on Treasury bill7.60007.5400%7.6000 %%7.5400 %c. After-tax yield on Preferred stock5.2650%5.2650 %

Part 2: Explanation:Step 1: Calculate the after-tax yield for an individual:a. For the municipal…

Answered: Problem 31-38 After-tax yields Suppose…

Entrepreneurial Finance

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Chapter3: Organizing And Financing A New Venture

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An investor is trying to decide between a muni paying 5.75% or an equivalent taxable corporate paying 8.25%. What is the minimum marginal tax rate the investor must have to consider buying the municipal bond? A. 30.00% B. 25.00% C. 66.67% D. 20.00%
chapter 9 #4 Assume that a company borrows at a cost of 0.08. Its tax rate is 0.35. What is the minimum after-tax cost of capital for a certain cash flow if 100 percent debt is used? ____________________ 100 percent common stock? ____________________ (assume that the stockholders will accept 0.08)
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Question 1: Assume that Larry's marginal tax rate is 25%. If corporate bonds pay 7.4% interest, what interest rate would a municipal bond have to offer for Larry to be indifferent between the two bonds? Multiple Choice a) 25.00% b) 9.25% c) 7.40% d) 5.55% e) None of the choices are correct.
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An investor is trying to decide between a muni paying 6.20 percent or an equivalent taxable corporate paying 8.25 percent. What is the minimum marginal tax rate the investor must have to consider buying the municipal bond? Group of answer choices 20.0 percent 66.7 percent 80.0 percent 25.0 percent 75.0 percent

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