Tax bracket invests in the preferred stock

Assignment Help Financial Management
Reference no: EM13722776

A corporation in a 34% tax bracket invests in the preferred stock of another company and earns a 6% pre-tax rate of return. An individual investor in a 15% tax bracket invests in the same preferred stock and earns the same pre-tax return. The after tax return to the corporation is _____ and the after tax return to the individual investor is

Reference no: EM13722776

Questions Cloud

Interest or discount rate with interest compounded annually : What is the present value of $7,800 received 13 years from now using a 16% interest or discount rate, with interest compounded annually?
What is the equivalent ticket sales : 28 years ago, ET: The Extra-Terrestrial generated $435,110,554 in ticket sales. What is the equivalent ticket sales figure in today's dollars (assume a 3% inflation factor compounded annually).
Currently the average tuition of a state college : College tuition has been rising at a rate of 7% per year. Currently the average tuition of a state college is $10,600 per year. Andrea's son Trevor will begin college in 9 years. Andrea's portfolio is making 2% annually. How much does Andrea need to ..
What is the return on your investment in the bond : You purchase a 7 percent $1,000 bond with a term of ten years and reinvest all interest payments. If interest rates rise to 10 percent after you purchase the bond what is the return on your investment in the bond?
Tax bracket invests in the preferred stock : A corporation in a 34% tax bracket invests in the preferred stock of another company and earns a 6% pre-tax rate of return. An individual investor in a 15% tax bracket invests in the same preferred stock and earns the same pre-tax return. The after t..
Pension plan is obligated to make disbursements : A pension plan is obligated to make disbursements of $1.7 million, $2.7 million, and $1.7 million at the end of each of the next three years, respectively. The annual interest rate is 8%. If the plan wants to fully fund and immunize its position, how..
What is the duration if the yield to maturity : Find the duration of a 6% coupon bond making annual coupon payments if it has three years until maturity and a yield to maturity of 6.2%. What is the duration if the yield to maturity is 10.2%?
Construct a price-weighted index : You construct a price-weighted index of 78 stocks. At the beginning of the day the index is 9,364.36. During the day, 77 stock prices remain the same, and one stock price increases $4.30. At the end of the day, your index value is 9,417.95. What is t..
What would be the maintenance margin if a margin call : Assume you sold short 100 shares of common stock at $50 per share. The initial margin is 60%. What would be the maintenance margin if a margin call is made at a stock price of $60?

Reviews

Write a Review

Financial Management Questions & Answers

  Explain what is the effective interest rate

The lender deducts this interest amount from the loan up front and gives you $17,500. In this case, we say that the discount is $2,500. What is the effective interest rate?

  Discuss and analyse all the issues in order

Discuss and analyse all the issues in order, and any other implications arising from this scenario for presentation to Mark Golledge .

  Explain the benefit of using flexible budgets

Prepare a flexible budget for 20,000, 22,500, and 25,000 units of activity and was Centron's experience in the quarter cited better or worse than anticipated? Prepare an appropriate performance report and explain your answer.

  Examine financial statements and budgets

Explain government financial reporting requirements Analyze financial statements and budgets to make appropriate administrative decisions and apply the budgets as a disciplinary process.

  Analyzes a legalethical issue or situation relating to a

prepare an 11- to 15-page paper excluding title page and reference page that analyzes a legalethical issue or situation

  How many rights are needed to buy a new share

Lamar Inc. is attempting to raise $5,000,000 in new equity with a rights offering. The subscription price will be $40 per share. The stock currently sells for $50 per share and there are 250,000 shares outstanding. How many rights are needed to buy a..

  Best estimate of teh remaining life left for eades corp

Eades has 9% annual coupon bonds that are callable and have 18years left until maturity. The bonds have a par value of $1,000, and their current market price is $1,220.35. However, Eades may call the bonds in eight years at a call price of $1,060. Wh..

  The various decision-making tools listed

1. Evaluate the advantages and disadvantages of the various decision-making tools listed (e.g., regular payback, discounted payback, net present value (NPV), internal rate of return (IRR), and modified internal rate of return).

  What is the future value of his investment cash flows

Larry James is planning to invest $25,200 today in a mutual fund that will provide a return of 0.09 each year. What will be the value of the investment in 10 years - what is the future value of his investment cash flows.

  A project has an initial cost of 40000 expected net cash

a project has an initial cost of 40000 expected net cash inflows of 9000 per year for 7 years and a cost of capital of

  Examine the criticality of timely information

Examine strategies for decision-making based on quantitative models and examine the criticality of timely information.

  What should be the yield to maturity on risk-free bonds

The rate of inflation for the next twelve months (Year 1) is expected to be 1.4%; it is expected to be 1.8% the following year (Year Two); and it is expected to be 2.0% every year after Year Two. Assume the real risk-free rate, r*, is 3 percent for a..

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