Q Hwk 11 14.28 points 3 ezto.mheducatio Saved Help Sa Melinda invests $220,000 in a City of Heflin bond that pays 6.8 percent interest. Alternatively, Melinda could have invested the $220,000 in a bond recently issued by Surething Incorporated that pays 8 percent interest and has risk and other nontax characteristics similar to the City of Heflin bond. Assume Melinda's marginal tax rate is 15 percent. Note: Leave no cells blank - be sure to enter "0" wherever required. Round your after-tax rate of return to one decimal place. Required: eBook Hint a. What is her after-tax rate of return for the City of Heflin bond? b. How much explicit tax does Melinda pay on the City of Heflin bond? Print c. How much implicit tax does she pay on the City of Heflin bond? References d. How much explicit tax would she have paid on the Surething Incorporated bond? e. What is her after-tax rate of return on the Surething Incorporated bond? a. After-tax rate of return b. Explicit tax % Mc Graw Hill c. Implicit tax d. Explicit tax e. After-tax rate of return % < Prev 3 of 7 Next >

Q Hwk 11 14.28 points 3 ezto.mheducatio Saved Help Sa Melinda invests $220,000 in a City of Heflin bond that pays 6.8 percent interest. Alternatively, Melinda could have invested the $220,000 in a bond recently issued by Surething Incorporated that pays 8 percent interest and has risk and other nontax characteristics similar to the City of Heflin bond. Assume Melinda's marginal tax rate is 15 percent. Note: Leave no cells blank - be sure to enter "0" wherever required. Round your after-tax rate of return to one decimal place. Required: eBook Hint a. What is her after-tax rate of return for the City of Heflin bond? b. How much explicit tax does Melinda pay on the City of Heflin bond? Print c. How much implicit tax does she pay on the City of Heflin bond? References d. How much explicit tax would she have paid on the Surething Incorporated bond? e. What is her after-tax rate of return on the Surething Incorporated bond? a. After-tax rate of return b. Explicit tax % Mc Graw Hill c. Implicit tax d. Explicit tax e. After-tax rate of return % < Prev 3 of 7 Next >

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 7FPE: An investor in the 22 percent tax bracket is trying to decide which of two bonds to select: one is a...

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Mr. Jackson is considering investing in corporate bonds. He has talked to an investment analyst who has advised him to choose between company A or company B bonds. The possible rates of return for the two bonds, which are subject to the state of the economy are given below: State of theeconomy Probability for State ofthe economy Possible rate of returnfor Company A bond Possible rate ofreturn for CompanyB bond Expansion 0.2 17% 20% Normal 0.1 13% 15% Recession 0.4 10% 11% Required:i. Calculate the expected return for each corporate bond ii. Calculate the variance and standard deviation for each bond. iii. Compute the coefficient of variation for each bond iv. Advice Mr. Jackson on the best bond to invest in.
Answer b,c,and d
You can invest in taxable bonds that are paying a yield of 9.4 percent or a municipal bond paying a yield of 7.65 percent. Assume your marginal tax rate is 21 percent. a. Calculate the after-tax rate of return on the taxable bond? (Round your answer to 2 decimal places. (e.g., 32.16)) b. Which security bond should you buy? a b. Rate of return The security bond one should buy is %
Kelly Phillips, an investor who resides in Livingston NJ, has a marginal tax rate of 28%. If a NJ municipal bond has a coupon rate of 5.83% and a YTM of 5.53%, what is the equivalent pretax yield on a taxable bond? a. 7.68% b. 8.10% c. 4.20% d. 3.98% e. 5.94%
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You live in a world with a flat 21% taxes on all income except for the interest on municipal bonds. You are considering the purchase of a taxable corporate bond. You have identified a municipal bond with similar time-to-maturity, liquidity and default concerns, which bears a yield of 3.38%. Based on these figures, estimate what yield the taxable corporate bond should bear. 5.23% 4.28% 4.83% 2.67%
Problem 1-45 (LO 1-3, LO 1-4) (Algo) Fergie has the choice between investing in a State of New York bond at 10.0 percent and a Surething Incorporated bond at 13.0 percent. Assuming that both bonds have the same nontax characteristics and that Fergie has a 30 percent marginal tax rate, in which bond should she invest?
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An investor is comparing the following two bonds: a bond from ABC Corp which pays an interest rate of 9 percent per year and a municipal bond which pays an interest rate of 7.9 percent per year. The investor is in the 22 percent tax bracket. Which bond will give the investor a higher after-tax interest rate and for which reason? a. The ABC bond because it pays a 9 percent interest rate, while the municipal bond only pays 7.9 percent. b. None of these is correct. c. The ABC bond because it pays an equivalent after-tax rate of 11.5 percent, while the municipal bond pays out an equivalent after-tax rate of 10.1 percent. d. The municipal bond because it pays an equivalent after-tax rate of 7.9 percent, while the ABC bond pays out an after-tax 7.02 percent interest rate. e. The municipal bond because it pays an equivalent after-tax rate of 7.9 percent, while the ABC bond pays out an equivalent after-tax rate of 2.0 percent.
Use excel