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igor_vitrenko [27]
3 years ago
15

Its investment bankers have told Trickee Corporation that it can issue a 20-year, 8.3% annual payment bond at par. They also sta

ted that the company can sell an issue of annual payment preferred stock to corporate investors who are in the 40% tax bracket. The corporate investors require an after-tax return on the preferred that exceeds their after-tax return on the bonds by 1.0%, which would represent an after-tax risk premium. What coupon rate must be set on the preferred in order to issue it at par? Show your calculations, if any, and explain your answer.
Business
1 answer:
skelet666 [1.2K]3 years ago
7 0
20% years of it 8.3 is the return
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