Calculation of after tax return
Course:- Finance Basics
Reference No.:- EM1359102

Assignment Help >> Finance Basics

The Omega Corporation has some excess cash that it would like to invest in marketable securities for a long-term hold. Its vice-president of finance is considering three investments (Omega Corporation is in a 35 percent tax bracket and the tax rate on dividends is 15 percent). Which one should she select based on aftertax return: (a) Treasury bonds at a 9 percent yield; (b) corporate bonds at a 12 percent yield; or (c) preferred stock at a 10 percent yield?

Ask Question & Get Answers from Experts
Browse some more (Finance Basics) Materials
What is the value of a preferred stock when the dividend rate is 14 percent on a $100 oar value? The appropriate discount rate for a stock of this risk level is 12 percent.
What is a company's fundamental, or intrinsic, value? What might cause a company's intrinsic value to be different than its actual market value?
What was the capital gains yield? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percentage rounded to
Learn more about government issued T-bills and munis. Would you invest in government issued T-bills? Why or why not? Are there specific munis you would or would not invest
The unit sales, variable cost, and fixed cost projections given above are probably accurate to within ±10 percent. What are the upper and lower bounds for these projections?
In capital budgeting, should we recognize this fact by estimating daily project cash flows and then using them in the analysis ? If we do not, are our results biased ? If so
The firm is considering switching to a 25-percent-debt capital structure, and has determined that it would have to pay an 8 percent yield on perpetual debt in either event.
Regardless of whether they buy the new machinary, Sales will be $500,000 for the next three years, COGS will fall from 70% of Sales to 60% of Sales if they buy the new machi