Make sense to invest in the municipal bond

Assignment Help Financial Management
Reference no: EM131070583

If a municipal bond has a coupon of 4.1%, and a corporate bond had a coupon of 7.3%, what tax bracket would you need to be for it to make sense to invest in the municipal bond?

Reference no: EM131070583

Questions Cloud

calculate the NPV and BCR for the pool project : The City of Swimfield is building a new pool. The pool will cost $1.5 million to construct in year one. The pool will open in year two and will need another capital investment of $150,000 in year eleven. All costs and benefits accrue at the end of ea..
What is your effective tax rate : The retail sales tax rate in Regressiveland is 6%. Use this information for the next four questions. If you earn $35,000 per year and spend your entire income each year, how much will you pay in sales taxes? what is your effective tax rate?
Their revenues are growing at a rate : The City of Sustainberg started 2016 with $500,000 in cash reserves. In 2016, they expect to spend $1.75 million, and they’ve forecasted $1.8 million in revenues. Their revenues are growing at a rate of 2% per year.
Mutually exclusive proposals for for flood control projecet : There are two mutually exclusive proposals for a for a flood control project in Illinois. The first proposal involves an initial outlay of $1,350,000 and annual expenses of $110,000. This plan is assumed to be permanent.
Make sense to invest in the municipal bond : If a municipal bond has a coupon of 4.1%, and a corporate bond had a coupon of 7.3%, what tax bracket would you need to be for it to make sense to invest in the municipal bond?
Most recent free cash flow : ABC’s the most recent free cash flow (FCF0) is $50 million. The free cash flow is expected to grow at a rate of 30 percent, 20 percent, and 10 percent in each of the next three years. After three years, it is expected to grow forever at a constant ra..
Intangible assets are included in the purchase agreement : On January 1, 2015, Charlie Corporation acquires all of the net assets of Rocky Corporation for $2,000,000. The following intangible assets are included in the purchase agreement: Assets Acquisition Cost Goodwill and going concern value $105,000 Lice..
What is the value of the firm : Consider a firm with EBIT of $125,000, debt of $500,000. If the rd is 12%, the rsU= 16% and the corporate tax rate is 40%, then what is the value of the firm (VL) according to MM with corporate taxes? $475,875 $528,750 $587,500 $668,750 $710,875
What is the yield to call for this bond : Fooling Company has a 13.6 percent callable bond outstanding on the market with 25 years to maturity, call protection for the next 10 years, and a call premium of $75. What is the yield to call (YTC) for this bond if the current price is 19 percent o..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Stock with a beta

You bought a stock with a beta of 1.4 and earned a return of 8.3%. Did you outperform the market if, during the same period, the market rose by 7.4% and you could have earned 5.4% by investing in a Treasury bill?

  Manufacturer has entered into american call option contract

A manufacturer has entered into American call option contract that allows it to buy 30,000 barrels of crude oil in three month at price of $185 per barrel. Crude oil is currently selling on the wholesale market at $165 per barrel and has a standard d..

  What is this employee benefit worth to you today

Your employer contributes $75 a week to your retirement plan. Assume that you work for your employer for another 20 years and that the applicable discount rate is 7.5 percent. Given these assumptions, what is this employee benefit worth to you today?

  How fast can sales grow before any fixed assets are needed

Southern Mfg., Inc., is currently operating at only 86 percent of fixed asset capacity. Current sales are $620,000. How fast can sales grow before any new fixed assets are needed?

  What is the cost of preferred stock financing

(Cost of preferred stock) The preferred stock of Gator Industries sells for $38.08 and pays $2.71 per year in dividends. What is the cost of preferred stock financing? If Gator were to issue 525,000 more preferred shares just like the ones it current..

  Increases the probability that a bond will be called

Which one of the following increases the probability that a bond will be called?

  Covered call by buying one share of a stock

An investor writes a covered call by buying one share of a stock at $50 and selling a European call option on the stock with strike price $55 at $1.25. What is his profit if he holds his position until maturity of the option and the stock price is $4..

  How much would you be willing to pay for this bond

HexChat, Inc. has issued 17 year bonds 5 years ago. The bonds pay semiannual coupons, with a coupon rate of 5.8 percent, and $1000 face value. If your required return on this investment is 9.8 percent APR, how much would you be willing to pay for thi..

  What do you understand from enron scandle movie

Movie Enron Scandle movie- What do you understand from this movie and write down what is in the movie?

  What is the firms current estimated intrinsic stock price

Your employer, a mid-sized human resources management company, is considering expansion into related fields, including the acquisition of Temp Force Co. an employment agency that supplies word processor operators and computer programmers to business ..

  What relationship the NVP have with the IRR

For the given cash flows below, assume the cash flow is the same in the next 2 years. Compute the NPV for each project, and compute the incremental IRR. Compare and explain why NPV always gives the correct decision. In what ways can the IRR make you ..

  What will you receive if you sell the bond

You purchase a $325,000 Town home and you pay 25% down. You obtain a 30 year fixed-rate mortgage with an annual interest rate of 5.75%. After 5 years you refinance the mortgage for 25 years at a 5.1% annual interest rate. A.T. bond with a $1000 par i..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd