Hui is currently considering investing in municipal bonds that earn 3.64 percent interest, or in taxable bonds issued by the Coca-Cola Company that pay 5.20 percent. Required: a. If Hui's tax rate is 22 percent, which bond should he choose?
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Hui is currently considering investing in municipal bonds that earn 3.64 percent interest, or in taxable bonds issued by the Coca-Cola Company that pay 5.20 percent.
Required: a. If Hui's tax rate is 22 percent, which bond should he choose?
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- Hui is currently considering investing in municipal bonds that earn 8.40 percent interest, or in taxable bonds issued by the Coca- Cola Company that pay 11.00 percent. Required: If Hui's tax rate is 22 percent, which bond should he choose? Which bond should he choose if his tax rate is 32 percent? At what tax rate would he be indifferent between the bonds? What strategy is this decision based upon?Hui is currently considering investing in municipal bonds that earn 8.55 percent interest, or in taxable bonds issued by the Coca-Cola Company that pay 11.40 percent. Required: If Hui's tax rate is 22 percent, which bond should he choose? Which bond should he choose if his tax rate is 32 percent? At what tax rate would he be indifferent between the bonds? What strategy is this decision based upon?David has the option to invest in one of the following Town of Elmdale bond that pays 6% interest annually Town of Schitt's Creek bond that pays 6.5% interest annually Prada corporate bond that pays 7% interest annually Gucci corporate bond that pays 6% interest annually David anticipates that his marginal rate will be 10%. Which investment should he choose from tax perspective? a.Group of answer choices b.Prada bond c.Elmdale bond d.Schitt's Creek bond e. Gucci bond
- Stacey faces a 15% tax rate on interest income. She can buy a $100 face value corporate bond yielding 12.5% ($12.5) annually for $100 or a municipal bond yielding $12.5 annually. Both bond issues have similar maturities and risk. How much is she willing to pay for the municipal bond?Melinda invests $200,000 in a City of Heflin bond that pays 6 percent interest. Alternatively, Melinda could have invested the $200,000 in a bond recently issued by Surething Inc. 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 25 percent. 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? c) How much implicit tax does she pay on the City Heflin bond? d) How much explicit tax would she have paid on the Surething, Inc. bond? e) What is her after-tax rate of return on the Surething Inc. bond?You decide to invest $27,000 in a municipal bond that earns 6.15% and is federally tax free. Your tax rate is 28%, how much have you effectively earned after ten years, assuming annual compounding? (Hint: must use two formulas to solve this question) In other words, because you are not paying taxes how much have you effectively earned?
- Suppose you are28 and married. You and your spouse file for income taxes jointly. You are in the 25% tax bracket. You are considering a few personal investment issues. Which one of the followings is likely to be the best investmentinyour 401 (k) account? _____ a. Municipal bonds b. 1-year Treasury notes c. Stock mutual funds d .AnnuitiesYou decide to invest $27,000 in a municipal bond that earns 6.15% and is federally tax free. Your tax rate is 28%, how much have you effectively earned after ten years, assuming annual compounding? (Hint: must use two formulas to solve this question) In other words, because you are not paying taxes how much have you effectively earnedk,A woman wishes to invest $14,000 in three types of bonds: municipal bonds paying 8% interest per year, bank investment certificates paying 9%, and high-risk bonds paying 13%. For tax reasons she wants the amount invested in municipal bonds to be at least three times the amount invested in bank certificates. To keep her level of risk manageable, she will invest no more than $4000 in high-risk bonds. How much should she invest in each type of bond to maximize her annual interest yield? [Hint: Let x = amount in municipal bonds and y = amount in bank certificates. Then the amount in high-risk bonds will be $14,000 − x − y.] municipal bonds $______ bank certificates $______ high-risk bonds $______
- You have $10,000 cash that you want to invest. Normally, you would deposit the money in a savings account that pays an annual interest rate of 6%. However, you are now considering the possibility of investing in a bond. Your alternatives are either a nontaxable municipal bond paying 9% or a taxable corporate bond paying 12%. Your marginal tax rate is 30% for both ordinary income and capital gains. (The marginal tax rate of 30% means that you will keep only 70% of your bond interest income.) You expect the general inflation rate to be 3% during the investment period. You can buy a high-grade municipal bond costing $10,000 that pays interest of 9% ($900) per year. This interest is not taxable. A comparable high-grade corporate bond for the same price is also available. This bond is just as safe as the municipal bond but pays an interest rate of 12% ($1,200) per year. The interest for this bond is taxable as ordinary income. Both bonds mature at the end of year 5.(a) Determine the real…Anita Anderson owns tax-free bonds valued at $12,000, which is 23% of her total investments. What is the value of her total investments? Round to the nearest dollar.Vince Oliver plans to invest P30,000 in municipal bonds, savings bonds,and treasury bills. He wishes to invest a minimum of P 5,000 in each of the three. If the interest rates are 12% for municipal bonds, 8% for savings bonds, and 10% for treasury bills, how much should he invest in each? Note: Do not use excel to solve the problem