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?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Finance Basics) Materials
Bond P is a premium bond with an 9.9 percent coupon. Bond D is a 5.9 percent coupon bond currently selling at a discount. Both bonds make annual payments, have a YTM of 7.9
Write a short statement describing the 'business risk' of the physical therapy business.....including pros and cons...from the viewpoint of growth and stability of revenue a
What is the value if the return on investment is at a 10.0% annualized rate? How much of a difference would it be if you stopped making contributions five years earlier?
You're a financial analyst at Pinkerton Interactive Graphic Systems (PIGS), a successful entrant in a new and rapidly growing field. As in most new fields, however, rapid gr
The CFO believes that a move from zero debt to 55.0% debt would cause the cost of equity to increase from 10.0% to 13.0%, and the interest rate on the new debt would be 8.0%
Determine the pretax return on equity and after-tax return on equity for the construction company in Figures 6-1 and 6-2. What insight does this give you into the company's fi
Strickler technology is thinking changes in its working capital policies to improve its cash flow cycle. Strickler's sales last year $3,250,000 (all on credit), & its net prof
Calculate the price of a company using the Dividend Discount Model, the Free Cash Flow model, and the Ratio comparison. The company you will study is Intel, only now you will