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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 %

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 %
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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