What is the breakeven corporate tax rate

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Reference no: EM132234883

Mantle Corporation is considering two equally risky investments:

  • A $5,000 investment in preferred stock that yields 7.75%.
  • A $5,000 investment in a corporate bond that yields 10%.

What is the breakeven corporate tax rate that makes the company indifferent between the two investments? Assume a 70% dividend exclusion for tax on dividends. (Do not round your intermediate answer and round your final answer to two decimal places.)

Could you show me how to calculate the answer?

Reference no: EM132234883

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