Problem 31-38 After-tax yields Suppose you are a wealthy individual paying 35% tax on income. What is the expected after-tax yield on each of the following investments? 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. Individual Corporation a. After-tax yield on Municipal note b. After-tax yield on Treasury bill 7.6000 7.5400 % 7.6000 % % 7.5400 % c. After-tax yield on Preferred stock 5.2650 % 5.2650 %
Problem 31-38 After-tax yields Suppose you are a wealthy individual paying 35% tax on income. What is the expected after-tax yield on each of the following investments? 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. Individual Corporation a. After-tax yield on Municipal note b. After-tax yield on Treasury bill 7.6000 7.5400 % 7.6000 % % 7.5400 % c. After-tax yield on Preferred stock 5.2650 % 5.2650 %
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Problem 31-38 After-tax yields
Suppose you are a wealthy individual paying 35% tax on income. What is the expected after-tax yield on each of the following
investments?
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.
Individual
Corporation
a. After-tax yield on Municipal note
b. After-tax yield on Treasury bill
7.6000
7.5400
%
7.6000 %
%
7.5400 %
c. After-tax yield on Preferred stock
5.2650
%
5.2650 %
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