1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
kolezko [41]
3 years ago
8

A municipal bond is paying a 6 percent annual yield. An equivalent risk corporate bond is paying 7 percent. Investors with a tax

rate of ________ or higher would prefer the municipal bond.
Business
1 answer:
masha68 [24]3 years ago
7 0

Answer:

14.29% or higher

Explanation:

Municipal bonds interest rates are tax free. Corporate bond rates however are have tac benefits through tax shield.

The formula for aftertax corporate bond rate = pretax rate(1-tax)

pretax rate = 7% or 0.07 as a decimal

aftertax rate(to be indifferent between the two) = 6% or 0.6

In order to be indifferent, the tax rate would be;

0.07 ( 1- tax ) = 0.06

0.07 - 0.07tax = 0.06

0.07 - 0.06 = 0.07tax

0.01 / 0.07 = tax

tax = 0.1429 or 14.29%

Therefore, Investors with a tax rate of 14.29% or higher would prefer the municipal bond.

You might be interested in
The Burkes pay their babysitter​ $5 per hour before 11 P.M. and​ $7.50 after 11 P.M. One evening they went out for 4 hr and paid
stiks02 [169]

Answer:

They came back home at 12 pm

Explanation:

Giving the following information:

The Burkes pay their babysitter​ $5 per hour before 11 P.M. and​ $7.50 after 11 P.M. One evening they went out for 4 hr and paid the sitter ​$27.50.

We need to formulate the total cost:

TC= 5*x + 7.5*y

x=5*4= 20

y=7.5*1= 7.5

TC= 5*4 + 7.5*1= $27.5

They came back home at 12 pm

4 0
3 years ago
Which of the following tells you how much your credit card interest will be if you only pay the minimum balance each month? A La
PIT_PIT [208]
The answer is D 
because it tells u the percentage rate of how much u would be getting back 


3 0
3 years ago
KaiLynn has total job benefits of $41,000 per year in her sales job. She pays $63 each month for a cell phone for work. She is a
alukav5142 [94]

Answer: a. $39,304

Explanation:

Let us begin by calculating the yearly phone bill.

$63 per month so that is

= 63*12

= $756

A total of $756 per year is spent on the company phone.

Kailynn buys 4 sample kits at $235 per kit.

= 235*4

= $940 in total for the kits last year.

Add the two figures to get her total expenditure from the company.

=940+756

= $1696

Subtract this from her total job benefits,

=$41,000 - $1696

= $39,304

$39,304 was her total employment compensation.

7 0
3 years ago
A manager that looks at loans and deposits increases and decreases among other things to measure the bank's liquidity position i
Mademuasel [1]

Answer:

The answer is letter C

Explanation:

The sources and uses of funds approach.

6 0
3 years ago
What is income not used for consumption called?
inna [77]
The answer to the question above is letter C. The income that is not used for consumption is called a SAVINGS. Saving consist of the amount left over when the cost of a person's consumer expenditure is subtracted from the amount of disposable income he or she earns.
6 0
3 years ago
Other questions:
  • What does stanley tell blanche and stella as they are going through her business papers?
    5·1 answer
  • Star, inc., is attempting to decide whether or not if it should change its manufacturing process to a new type of technology. th
    5·1 answer
  • The ledger of Beckett Rental Agency on March 31 of the current year includes the selected accounts below before adjusting entrie
    8·1 answer
  • How do you short term goals differ from long-term goals
    9·1 answer
  • The Don't Tread on Me Tire Company had retained earnings at December 31, 2015 of $202,000. During 2016, the company had revenues
    11·1 answer
  • Of the salaries payable, $30,000 was owed to an officer of the company. The remaining amount was owed to salaried employees who
    12·1 answer
  • The total of all accumulated and unpaid deficits a situation in which revenue exceeds outlays a situation in which outlays excee
    15·1 answer
  • With a 9-month maturity bucket, a 3-month loan would be considered a _____ asset and a 30-year mortgage with a rate adjustment i
    14·1 answer
  • I know this is impossible but can you guys help? Doesn’t have to use fancy words and doesn’t have to be long, I’m not English na
    9·1 answer
  • Why do you think that people might treat a small purchase like a snack, differently from the way they would treat the purchase o
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!