Tax-exempt municipal bond

Assignment Help Financial Management
Reference no: EM13987864

Assume you are in the 39.6 percent tax bracket and purchase a 3.35 percent, tax-exempt municipal bond. Use the formula presented in this chapter to calculate the taxable equivalent yield for this investment.

Reference no: EM13987864

Questions Cloud

Compounded monthly in your investment account : Your current age is 22 and you plan to retire at age 67. At retirement you want to have a “nest egg” of $3 million in today’s buying power. Over that time-period you expect inflation to average 3% per year. If you can earn 3.8% APR, compounded monthl..
What would you recommend as a backup solution : You need to make sure that you back up the databases each night in case you have a disaster and must recover them from backup. Because each database takes two hours to back up and you only have a six-hour window in which to do backups each day, wh..
Considering investing in a four-year bond : Suppose that you are considering investing in a four-year bond that has a par value of $1,000 and a coupon rate of 6%. What is the price of the bond if the market interest rate on similar bonds is 6%? What is the bond’s current yield? Suppose that yo..
What is the absolute error of the angle : When calculating the gravity using a concial pendulum, we used the equation g = Vt2/R tanθ. What is the absolute error of the angle and of the experimental value of gravity?
Tax-exempt municipal bond : Assume you are in the 39.6 percent tax bracket and purchase a 3.35 percent, tax-exempt municipal bond. Use the formula presented in this chapter to calculate the taxable equivalent yield for this investment.
Describe the management objectives of a firm governed : Describe the management objectives of a firm governed by the shareholder wealth maximization model and one governed by the stakeholder wealth maximization model. Give an example of how these two models may lead to different decision-making by executi..
What is the market value of the bond : What is the market value of the following bond? Coupon 8% Maturity date 2038 Interest paid semiannually Par Value $1000 Market interest rate 10%. What is the formula for excel?
Opened a margin account-local brokerage firm : You’ve just opened a margin account with $15,000 at your local brokerage firm. You instruct your broker to purchase 800 shares of Landon Golf stock, which currently sells for $62 per share. Suppose the call money rate is 5.5 percent and your broker c..
Discuss some of the factors affecting the exchange rate : Discuss some of the factors affecting the exchange rate. If you were elected to choose between a fixed, freely floating, or a dirty float exchange rate system, which would you choose for your home country? Why?

Reviews

Write a Review

Financial Management Questions & Answers

  How much should we budget for electricity

Last year we budgeted $8,000 for electricity. We expect to the price per kilowatt hour (kWh) to go up from 6.5 cents per kWh to 7 cents per kWh. We have also recently implemented a program to reduce energy usage and expect our usage to decrease by 20..

  Calculate the amount of the firms after tax cash flow

Moby Dick Corporation has sales of $4,635,480 income tax of $400,651; the selling general and administrative expenses of $294,228; depreciation of $395,852; cost of goods of $2,543,550; and interest expense of $188,723. Calculate the amount of the fi..

  What is the companys target debt-equity ratio

Fama's Llamas has a weighted average cost of capital of 9.5 percent. The company's cost of equity is 15.5 percent, and its pretax cost of debt is 8.5 percent. The tax rate is 34 percent. What is the company's target debt-equity ratio?

  Straight line method and declining balance method

The original cost of a dozer is $140,000.00. The estimated useful life is assumed to be 6 years. the salvage rate is $180,000.00. Find the book value at the end of year 3; straight line method? declining balance method?

  The company pledges to increase its dividend

Ziggs Corporation will pay a $4.80 per share dividend next year. The company pledges to increase its dividend by 4.50 percent per year, indefinitely. Required: If you require a 11 percent return on your investment, how much will you pay for the compa..

  How simulation can be use in multinational capital budgeting

Explain how simulation can be used in multinational capital budgeting. What can it do that other risk adjustment techniques cannot?

  Explain risks compensated for in bond yields

Explain risks compensated for in bond yields.

  Different types of bonds such as treasury-corporate

There are alot of different types of bonds such as treasury, corporate, municipal, and foreign. Do all bonds have a return date?   Legally, The original maturates has a range from 10 to 40 years. What happens after 40 years if the business goes bankr..

  Assume that the salary payments are equal amounts paid

You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak street sweeper accident. In the trial, doctors testified that it will be five years before the plaintiff is able to return to work. The jury has already dec..

  What is the current share price-growth rate in dividends

Leisure Lodge Corporation is expected to pay the following dividends over the next four years: $20, $10, $6.2 and $2.7. Afterwards, the company pledges to maintain a constant 4 percent growth rate in dividends forever. If the required return on the s..

  Estimate the value per share-dividend discount model

Johnson and Johnson reported earnings per share of $6.400 in 2013 and paid dividends per share of $3.40 in that year. The firm reported depreciation of $630 million in 2013 and capital expenditure of $950 million. Estimate the value per share, using ..

  What is the maximum price per share

Schultz Industries is considering the purchase of Arras Manufacturing. Arras is currently a supplier for Schultz, and the acquisition would allow Schultz to better control its material supply. The current cash flow from assets for Arras is $7.3 milli..

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