provide correct answer of this General accounting question Mendoza Corporation is evaluating three investmentalternatives:•Corporate bonds from Altura Inc. with a yield of10.50%• Tax-exempt municipal bonds with a yield of 7.90%Preferred stock from Solaris Corp. with a dividendyield of 9.25%Mendoza Corporation's tax rate is 30%. Assume a 65%dividend exclusion for tax purposes on preferred stockdividends. What is the after-tax return on the bestinvestment alternative?

Step 1: Definition of After-Tax ReturnAfter-tax return is the actual return an investor earns after…

Answered: Mendoza Corporation is evaluating three…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 9P

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Financial Accounting
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Arvo Corporation is trying to choose between three alternative investments. The three securities that the company is considering are as follows: Tax-free municipal bonds with a return of 9.30% Wooli Corporation bonds with a return of 12.90% CFI Corp. preferred stock with a return of 10.70%. The company's tax rate is 25.00%. What is the after - tax return on the best investment alternative? Assume a 50.00% dividend exclusion for taxes on dividends. (Round your final answer to 3 decimal places.) a. 9.363% b. 8.025% c. 11.288% d9.675% e. 9.300%
What is the equivalent after -tax yield on these financial accounting question?
Answer? ? Financial accounting question
An overview of a firm's cost of debt For which capital component must you make a tax adjustment when calculating a firm’s weighted average cost of capital (WACC)? Pick the correct choice. A- Preferred stock B- Equity C- Debt Three Waters Company (TWC) can borrow funds at an interest rate of 12.50% for a period of five years. Its marginal federal-plus-state tax rate is 45%. TWC’s after-tax cost of debt is_________% (rounded to two decimal places). At the present time, Three Waters Company (TWC) has 15-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,136.50 per bond, carry a coupon rate of 12%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 45%. If TWC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? Pick the correct choice. 5.60% 5.04%…
An investor purchases one municipal and one corporate bond that pay rates of return of 7.2% and 9.1%, respectively. If the investor is in the 15% marginal tax bracket, his or her and _, respectively. after-tax rates of return on the municipal and corporate bonds would be 7.2%;7.735% 8.471%:9.1% O 7.2%;9.1% 6.12%;7.735%
You are given the following information for Lighting Power Company. Assume the company's tax rate is 25 percent. Debt: Common stock: 430,000 shares outstanding, selling for $61 per share; the beta is 1.12. 18,500 shares of 3.7 percent preferred stock outstanding, a $100 par value, currently selling for $82 per share. 6 percent market risk premium and 4.7 percent risk-free rate. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16.) Preferred stock: Market: 10,000 5.9 percent coupon bonds outstanding. $1,000 par value, 25 years to maturity, selling for 107 percent of par; the bonds make semiannual payments. WACC %
Please provide answer the following requirements a and b on these financial accounting question
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 a. 100 percent debt is used? b. 100 percent common stock? (assume that the stockholders will accept 0.08)
Suppose that TapDance, Inc's, capital structure features 65 percent equity, 35 percent debt, and that its before-tax cost of debt is 6 percent, while its cost of equity is 11 percent. Assume the appropriate weighted average tax rate is 34 percent. What will be TapDance's WACC? (Round your answer to 2 declmal placcs.) nces. Mc Graw Type here to search | 五 LE
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