A taxable corporate bond issued by Zenith Industries yields 7.1%. For an investor in a tax bracket of 30%, what is the equivalent after-tax yield?

Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 1PEB: Brower Co. is considering the following alternative financing plans: Income tax is estimated at 40%...
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What is the equivalent after -tax yield on these financial accounting question?

A taxable corporate bond issued by Zenith Industries
yields 7.1%. For an investor in a tax bracket of 30%,
what is the equivalent after-tax yield?
Transcribed Image Text:A taxable corporate bond issued by Zenith Industries yields 7.1%. For an investor in a tax bracket of 30%, what is the equivalent after-tax yield?
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