Assume that Shavonne's marginal tax rate is 37 percent and her tax rate on dividends is 25 perce If a corporate bond pays 9.8 percent interest, wh dividend yield would a dividend-paying stock (w no growth potential) have to offer for Shavonne
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- Assume that Keisha's marginal tax rate is 37 percent and her tax rate on dividends is 25 percent. If a city of Atlanta bond pays 7.5 percent interest, what dividend yield would a dividend-paying stock (with no growth potential) have to offer for Keisha to be indifferent between the two investments from a cash-flow perspective?(a). An investor who is in the 28 % tax bracket is considering choosing between an investment earning a 6 % taxable return and an investment earning a 4 % tax-free yield. Advise the investor which investment he should choose and give reasons. (b) If you buy 100 common shares of ZANACO Plc, to what are you entitled? (c) What is the most money you could make over the next year? (d) If you pay K95 per share, what is the most money you could lose over the year? (e) Stock Initial Price Final Price Shares (millions) ABC K25 K30 20 XYZ K100 K90 1 (1) Determine the portfolio initial…( a ). An investor who is in the 28 % tax bracket is considering choosing between an investment earning a 6 % taxable return and an investment earning a 4 % tax-free yield. Advise the investor which investment he should choose and give reasons. (b). If you buy 100 common shares of ZANACO Plc, to what are you entitled? What is the most money you could make over the next year? If you pay K95 per share, what is the most money you could lose over the year?
- Suppose that JB Cos. has a capital structure of 78 percent equity, 22 percent debt, and that its before-tax cost of debt is 12 percent while its cost of equity is 16 percent. Assume the appropriate weighted-average tax rate is 21 percent and JB estimates that they can make full use of the interest tax shield.What will be JB’s WACC? (Round your answer to 2 decimal places.) WACC: ___.__%The Shrieves Corporation has $10,000 that it plans to invest in marketablesecurities. It is choosing among AT&T bonds, which yield 7.5%, state of Florida muni bonds, which yield 5% (but are not taxable), and AT&T preferredstock, with a dividend yield of 6%. The corporate tax rate is 35%, and 70% ofthe dividends received are tax exempt. Find the after-tax rates of return on allthree securities.A corporate investor of preferred stock receiving a before-tax preferred yield of 8.5%, and having a corporate tax rate of 21%, would receive an after-tax preferred yield of approximately _____. Assume the tax rate on dividends is 15%.
- Suppose that TipsNToes, Inc.'s capital structure features 55 percent common equity, 45 percent debt and its cost of equity is 14 percent, while its before-tax cost of debt is 10 percent. It has no preferred stock. If the appropriate tax rate is 20%, what will be TipsNToes's after-tax WACC?The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Stock Expected Dividend Expected Capital Gain A $0 $10 B 5 5 C 10 0 A. If each stock is priced at $160, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%), and (iii) an individual with an effective tax rate of 15% on dividends and 10% on capital gains? Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) B. Suppose that investors pay 50% tax on dividends and 20% tax on capital gains. If stocks are priced to yield an after-tax return of 8%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity. (Do not round intermediate calculations. Round your answers to 2 decimal places.)buy a stock for $41 per share and sell it for $59 after holding it for slightly over a vear and collecting a $4.7 per share dividend, If dividend income is taxed at a 25% rate and capital gains are taxed at 29%, what is your after-tax holding period return? (Write your answer in percentage and round it to 2 decimal places)
- Suppose that JB Cos. has a capital structure of 80 percent equity, 20 percent debt, and that its before-tax cost of debt is 12 percent while its cost of equity is 16 percent. Assume the appropriate weighted-average tax rate is 21 percent and JB estimates that they can make full use of the interest tax shield. What will be JB’s WACC? (Round your answer to 2 decimal places.)You buy a stock for $47 per share and sell it for $58 after holding it for slightly over a year and collecting a $5.9 per share dividend. If dividend income is taxed at a 28% rate and capital gains are taxed at 24%, what is your after-tax holding period return?Arvo Corporation is trying to choose between three alternative investments. The three securities that the company is considering are as follows: Tax-free municipal bonds with a return of 9.30% Wooli Corporation bonds with a return of 12.90% CFI Corp. preferred stock with a return of 10.70%. The company's tax rate is 25.00%. What is the after - tax return on the best investment alternative? Assume a 50.00% dividend exclusion for taxes on dividends. (Round your final answer to 3 decimal places.) a. 9.363% b. 8.025% c. 11.288% d9.675% e. 9.300%
