Solution-Find after-tax rate of return on highest yielding

Find after-tax rate of return on highest yielding security

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Cooley Corporation has $20,000 that it plans to invest in marketable securities. It is choosing between MCI bonds which yield 10 percent, state of Colorado municipal bonds which yield 7 percent, and MCI preferred stock with a dividend yield of 8 percent. Cooley's corporate tax rate is 40 percent, and 70 percent of its dividends received are tax exempt. What is the after-tax rate of return on the highest yielding security?

Reference no: EM132724449

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Find after-tax rate of return on highest yielding security

Reference no: EM132724449

Reference no: EM132724449

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