What is after tax rates of return on all three securities

Assignment Help Financial Management

Reference no: EM13946935

A corporation has $20,000 that it plans to invest in marketable securities. Choices include corporate bonds that yield 8%, municipal bonds that yield 6.2% and preferred stock that yields 7.4%. The corporations corporate tax rate is 30%. What is the after tax rates of return on all three securities?

Reference no: EM13946935

Questions Cloud

The required rate of return for this stock : A stock will not pay a dividend for 3 years and then will pay a $5 dividend (D4) that will grow constantly at 5%. If the required rate of return for this stock is 10%, what is the value today?

What is the cash surplus or deficit for these two months : A firm has estimated the 2-month cash budget below. What is the cash surplus or deficit for these two months? (Enter your answers in millions of dollars. Negative amounts should be indicated by a minus sign.) ($ in millions) MAR APR Sales 140.0 150.0..

Determine the incremental after-tax operating cash flows : Burton, a manufacturer of snowboards, is considering replacing an existing piece of equipment with a more sophisticated machine. The following information is given. The proposed machine will cost $120,000 and have installation costs of$15,000. lt wil..

Source of cash for a non-tax-paying firm : Which one of the following is a source of cash for a non-tax-paying firm?

What is after tax rates of return on all three securities : A corporation has $20,000 that it plans to invest in marketable securities. Choices include corporate bonds that yield 8%, municipal bonds that yield 6.2% and preferred stock that yields 7.4%. The corporations corporate tax rate is 30%. What is the a..

How much should you invest in the risk-free asset : You want your portfolio beta to be 0.90. Currently, your portfolio consists of $4,000 invested in stock A with a beta of 1.47 and $3,000 in stock B with a beta of 0.54. You have another $9,000 to invest and want to divide it between an asset with a b..

Consider the prevailing conditions : Consider the prevailing conditions that could affect the demand for stocks, including inflation, the economy, the budget deficit, national debt, and the Fed’s monetary policy, political conditions, and the general mood of investors. Based on these pr..

What would risk-free rate-two stocks to be correctly priced : Stock Y has a beta of 1.0 and an expected return of 13.5 percent. Stock Z has a beta of .6 and an expected return of 9 percent. What would the risk-free rate have to be for the two stocks to be correctly priced?

Car payment is interest expense : You borrow $78,000 to purchase a new car. The dealership offers you a 7% APR for 5 years. how much of your first car payment is interest expense? Explain how you found your answer.

User Account

All Pages