Corporate After-Tax YieldThe Shrieves Corporation has $15,000 that it plans to invest in marketable securities. It is choosing among AT&T bonds (which yield 5.9%), AT&T preferred stock (with a dividend yield of 5.0%), andstate of Florida muni bonds (which yield 4% but are not taxable). The federal tax rate is 21% (ignore any possible state corporate taxes). Recall that 50% of dividends received are tax exempt. Findthe after-tax rates of return on all three securities after paying federal corporate taxes. Round your answers to three decimal places.After-tax rate of return on AT&T bond:%After-tax rate of return on AT&T preferred stock:After-tax rate of return on Florida muni bonds:%

Yield on Bond = 5.9% Dividend yield = 5.0% Yield on Municipal bonds = 4% Tax rate = 21% 50% of…

Answered: Corporate After-Tax Yield The Shrieves…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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On January 1 of this year, Diego Corporation sold bonds with a face value of $530,000 and a coupon rate of 5 percent. The bonds mature in 10 years and pay interest annually on December 31. Diego uses the effective-interest amortization method. Ignore any tax effects. Each case is independent of the other cases. (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Required:1. Complete the following table. The interest rates provided are the annual market rate of interest on the date the bonds were issued. Case A (5 percent) Case B (7 percent) Case C (4 percent) a. Cash received at issuance b. Interest expense recorded in Year 1 c. Cash paid for interest in Year 1 d. Cash paid at maturity for bond principal
Your investment department has researched possible investments in corporate debt securities Among the available investments are the following $100 million bond issues, each dated January 1, 2024, Prices were determined by underwriters at different times during the last few weeks. Company 1. BB Corporation 2. DO Corporation GG Corporation Bond Price $109 million $ 100 million $90 million Most attractive investment Loast attractive investment Stated Rate 11% 10% 9% Each of the bond issues matures on December 31, 2043, and pays interest semiannually on June 30 and December 31 For bonds of similar risk and maturity, the market yield of January 1, 2024, is 10%. Required: Other things being equal, which of the bond issues offers the most attractive investment opportunity if it can be purchased at the prices stated? The least attractive? Note: Use tables, Excel, or a financial calculator. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD.of.$1)
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Please correct answer and don't use hend raiting this question
If a corporation sells a bond with a 5% 25 years $5,000 par value the pain Seminole interest what is the coupon payment to the bondholder?
Subject: Engineering economics A Corporation sold an issue of 20-year bonds, having a total face value of 20,000,000 for 8, 500,000 The bonds bear interest at 16%, payable semiannually. The company wishes to establish a sinking fund for retiring the bond issue and will make semiannual deposit that will earn 12%, compounded semiannually. Compute the annual cost for interest and redemption of these bonds.
Problem #4 On February 1, 2021 Leslie's Linguine Ltd. purchased 630, 10-yr, $1,000 bonds for an amount which would generate a 5.0% annual rate of return. The bonds pay interest at an annual rate of 5.2% and the investment was purchased at a price Interest payments are made semi-annually on Feb. 1st and Aug. 1st. The investment is classified as Held to Maturity Securities. 1-Feb-21 Bond purchase 1-Aug-21 First semi-annual interest payment is received and amortization of discount or premium is recorded using the effective interest method. 31-Dec-21 The bonds are trading at $1,014 as of December 31, 2021 which is the company's year end. Interest is accrued. 1-Feb-22 Second semi-annual interest payment is received and amortization of discount or premium is recorded using the effective interest method. Instructions: Draft the appropriatejournal entries for the dates listed above.
Company issuing three year debt, and has come up with the following estimates of the value of the interest tax shield and the probability of distress for different levels of debt: PV of interest tax shield ($MM) $ Probability of Financial Distress . $0 0% $ $25 0.4 $ 0% AMOUNT OF DEBT (SMM) $60 1.1 $ $70 1.2 $ 3% 5% $50 0.9 $ 1% $80 1.4 $ 8% $90 1.6 $ 20% $100 1.8 33% If in the event of distress, the present value of distress costs is equal to $15 million, then the optimal level of debt for company: A. $25 million B. $50 million C. $60 million D. $70 million
Mf2. On January 1, 2022. Sarasota Company purchased 12% bonds having a maturity value of $430,000 for $462,600.36. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2022, and mature January 1, 2027, with interest receivable December 31 of each year. Sarasota elected the fair value option for this held-for-collection investment. Prepare any entry necessary at December 31, 2022, assuming the fair value of the bonds is $464,400. (Round answers to 2 decimal places, e.g. 5,275.25. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

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Corporate After-Tax Yield The Shrieves Corporation has $15,000 that it plans to invest in marketable state of Florida muni bonds (which yield 4% but are not taxable). The fede the after-tax rates of return on all three securities after paying federal corp After-tax rate of return on AT&T bond: %