Answer:
a. Municipal bond
b. Yes. To Corporate Bond.
Explanation:
Municipal bonds are tax exempt so the better option will be the one offering a higher return after it is adjusted for tax.
a. Corporate after-tax rate = 9.5% * ( 1 - 33%)
= 0.06365
= 6.4%
<em>Municipal rate is higher at 7% and so is a better option. </em>
b. Corporate after-tax rate = 9.5% * ( 1 - 15%)
= 0.08075
= 8.08%
<em>Corporate bond return is now higher than Municipal bond so is a better option.</em>
Answer:
c) produce in the short run but shut down in the long run.
Explanation:
Option C is correct because the price charged is above the average variable cost which means the firm is still covering its variable cost of production. Moreover, if the firm still continues the same in the long run then it will shut down its operation. But if the price charged is below or equal to average variable cost then the firm will shut down its production even in the short run.
Answer:
7.6%
Explanation:
The formula for calculating the Required return is:
Required return = Dividend yield + Capital Gain Yield
Hence,
13% = Dividend Yield + 5.40%
Dividend Yield = 7.60%.
Hope this helps.
Goodluck.