Bonds would offer you the best after tax return

Assignment Help Financial Management

Reference no: EM13937363

Suppose you are in the 30% federal tax bracket and pay an additional 6% in Indiana state taxes. Assume you are an Indiana resident. Which of the following bonds would offer you the best after tax return? FORMAT TO 4 DECIMAL

A. Cannot calculate without further information

B. An Indiana Muni paying 5.25% for 15 years

C. A Michigan Muni paying 5.15% for 15 years

D. A U.S. Treasury paying 6.45% for 15 years

E. A Home Depot bond paying 7.35% for 15 years

Reference no: EM13937363

Questions Cloud

What is the total debt ratio : A firm has a debt-to-equity ratio of 0.55. What is the total debt ratio?

What equity multiplier is require to double return on equity : UM Graduation Supplies has debt-to-equity ratio of 80%, profit margin of 10%, total sales of 10 million and total assets of 5 million. The president is unhappy with the current return on equity, and he thinks it could be doubled. This could be accomp..

Non constant growth : Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $1.00 coming 3 years from toda..

Yield to maturity reflects the current market rate : The faster you pay off of mortgage, the more you save on interest; this is one of the advantages of paying off a loan earlier. Yield to maturity reflects the current market rate and it is the appropriate discount rate that matches the present value o..

Bonds would offer you the best after tax return : Suppose you are in the 30% federal tax bracket and pay an additional 6% in Indiana state taxes. Assume you are an Indiana resident. Which of the following bonds would offer you the best after tax return?

What is the yield to maturity on the newly-issued bonds : Crandal Dock works is undergoing a major expansion. The expansion will be financed by issuing new 15-year, $1,000 par, 9% annual coupon bonds. The market price of the bonds is $1,070 each. Five Rivers flotation expense on the new bonds will be $50 pe..

The expected cash flows each year from the mine : Seth Bullock, the owner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company’s geologist, has just finished his analysis of the mine site. He has estimated that the mine would be productive for eight years, a..

What was the cash coverage ratio for the year : The Docksider has net income for the most recent year of $25,000. The tax rate was 20 percent. The firm paid $2,500 in total interest expense and deducted $1,500 in depreciation expense. What was the cash coverage ratio for the year?

What must the coupon rate on bonds : The Los Angeles Airport Authority has bonds on the market with 10.5 years to maturity, a yield to maturity of 8%, and a current price of $925. The bonds make semi-annual payments. What must the coupon rate be on LA Airport’s bonds?

User Account

All Pages