The Omega Corporation has some excess cash it would like to invest in marketable securities for a long-term hold. Its Vice-President of Finance is considering three investments: (a) Treasury bonds at a 6 percent yield; (b) corporate bonds at a 13 percent yield; or (d preferred stock at an 7 percent yield. Omega Corporation is in a 40 percent tax bracket and the tax rate on dividends is 10 percent. a-1. Compute the aftertax yields for the three investment options. Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. Aftertax yields a. Treasury bonds b. Corporate bonds c. Preferred stock 3.60 % 7.80% 6.30% e-2. Which one of the three investments should she select based on the aftertax yields? Corporate bond Prou 6 of 10 # Next > Activate Win
The Omega Corporation has some excess cash it would like to invest in marketable securities for a long-term hold. Its Vice-President of Finance is considering three investments: (a) Treasury bonds at a 6 percent yield; (b) corporate bonds at a 13 percent yield; or (d preferred stock at an 7 percent yield. Omega Corporation is in a 40 percent tax bracket and the tax rate on dividends is 10 percent. a-1. Compute the aftertax yields for the three investment options. Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. Aftertax yields a. Treasury bonds b. Corporate bonds c. Preferred stock 3.60 % 7.80% 6.30% e-2. Which one of the three investments should she select based on the aftertax yields? Corporate bond Prou 6 of 10 # Next > Activate Win
Chapter11: The Cost Of Capital
Section: Chapter Questions
Problem 14PROB
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