What would fully-taxable corporate bond

Assignment Help Financial Management
Reference no: EM131084547

Emily is comparing two bonds that she is thinking about purchasing. One is a municipal bond issued by her home state with a 4% yield that would be free from both federal and state taxation. Emily is in the 25% federal tax bracket and the 5% state tax bracket. What would a fully-taxable corporate bond have to yield in order to produce the same after-tax return as the 4% municipal bond? Show work including intermediate steps. Express your answer as a percentage rounded to two decimal places. (Hint: You cannot base the answer on the sum of the tax rates. Use the appropriate equation.)

Reference no: EM131084547

Previous Q& A

  Analyze the benefits and drawbacks of fixed-price contracts

Analyze the benefits and drawbacks of fixed-price contracts from the perspective of a contractor. Analyze the benefits and drawbacks of cost-reimbursement contracts from the perspective of the federal government.

  Find the conversion premium in dollars and in percent

A company in the semiconductor industry has a $1,000 convertible bond with a conversion ratio of 32 and a coupon of 3.9%. The bond is currently priced at $740. The company’s stock trades at $19, and pays an annual dividend of $0.75. Find the conversi..

  Review psychodynamic humanistic and behavioral techniques

Imagine that you are suffering from test anxiety and that you are researching a different therapy approaches that might help you overcome your anxiety. Review psychodynamic, humanistic, behavioral, cognitive, and family and group therapy technique..

  Course name-criminology

What if you were born in a poor neighborhood and your parents were working two jobs to survive. Your mom gets ill and cannot work anymore.

  The market price of the bond and market interest rates

A bond will make its semi-annual interest payment of $80 exactly five days from today. You purchase this bond today, receive the interest payment five days from now, and sell the bond five days after that. Over then ten days you are holding the bond,..

  How much citizen participation occurs in local government

How much citizen participation occurs in your local government, such as turnout in local elections and attendance at local government meetings?

  Determine its pretax cost of debt

Mudvayne, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 18 years to maturity that is quoted at 108 percent of face value. The issue makes semiannual payments and has an embedded cost of 4 percent annually. ..

  Describe the situation and the nature of the conflict

Describe the situation and the nature of the conflict. Explain what will happen if you do not attempt to solve the conflict. Explain the intervention meeting you would plan when you bring the two parties having the conflict together.

  Management structure for a population-based program

Formulate public health childhood obesity crises intervention strategies. Formulate and apply a management structure for a population-based program. Design a program that integrates evidenced-based population health guidelines.

  For the vector of daily temperatures

The daily noon temperature in New Jersey in July can be modeled as a Gaussian random vector T = [T1··· T31] where Ti is the temperature on the ith day of the month. Suppose that E[Ti] = 80 for all i, and that Ti and Tj have covariance


Write a Review


Similar Q& A

  What is the total payoff on the option contracts

Josh owns 2 call options on Foster Glass stock. The exercise price is $47.50 and the stock price at expiration is $49.01. What is the total payoff on the option contracts?

  Addition to the annual operating cash flow for that year

Assuming that the average ice cream store has a life of about 10 years, what is the NPV of opening a new store if the required rate of return in this business is 10%? You may assume that the $250,000 in initial inventory will be recovered at the end ..

  Find an entity capable of serving as an IRO

You work for a healthcare organization that has just entered into a CIA. You have been asked to identify and contract with an appropriate IRO to perform the reviews required by the CIA. In 200 words or more, explain where you will look to find an ent..

  Explain why depository institutions are losing market share

Documents the sharp drop in financial assets controlled by depository institutions. Explain why depository institutions are losing market share. What must happen for them to reverse this trend? Explain why mutual funds and pension funds are increasin..

  Calculate the value of fraziers stock

Frazier Manufacturing paid a dividend last year of $2, which is expected to grow at a constant rate of 5%. Frazier has a beta of 1.3. If the market is returning 11% and the risk-free rate is 4%, calculate the value of Frazier's stock.

  What is the expected return on this stock

The stock of Wiley United has a beta of 0.92. The market risk premium is 8.6 percent and the risk-free rate is 3.2 percent. What is the expected return on this stock?

  Well-established supplier of fine percussion instruments

Kelsey Drums, Inc., is a well-established supplier of fine percussion instruments to orchestras all over the United States. The company's class A common stock has paid a dividend of $11 per share per year for the last 17 years. How much total capital..

  What is a leveraged buyout and what is mezzanine financing

What is a leveraged buyout? What is mezzanine financing? What is a tax-free merger? Explain the difference between the economic and financial definitions of business failure.

  Several programs believed to reach the target population

A pharmaceutical company develops a media campaign targeting aging women at risk for osteoporosis. The ad is scheduled to run a total of 21 times and will air on several programs believed to reach the target population.

  Estimate the break-even point

A company sells car batteries for $80 each and expects to sell 200,000 units. The variable costs is $28 and fixed costs is $1,000,000. Estimate the break-even point.

  What is the expected return on your portfolio

You analyze the prospects of several companies and come to the following conclusions about the expected return on each: You decide to invest $4,000 in star bucks, $6,000 in Sears, $12,000 in Microsoft, and $3,000 in Limited Brands. What is the expect..

  Preferred stock expected return

You are planning to purchase 200 shares of preferred stock and must choose between Stock A and Stock B. Stock A pays an annual dividend of $5.25 and is currently selling for $38. stock B pays an annual dividend of $5.05 and is selling for $40. If you..

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