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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.

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kari74 [83]

Answer:

c. High Performance

Explanation:

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Based on a predicted level of production and sales of 15,000 units, a company anticipates reporting operating income of $22,000
jarptica [38.1K]

Answer:

e.$8,000 of fixed costs and $108,000 of variable costs.

Explanation:

Fixed costs don't change with a change in production volume, therefore, fixed costs remain $8,000.

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Assuming a new production volume of 18,000 units, budgeted variable costs are:

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The budgeted amounts are: e.$8,000 of fixed costs and $108,000 of variable costs.

8 0
4 years ago
Profit maximization occurs when:
lianna [129]

Answer:

The correct answer is option B.

Explanation:

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If the marginal revenue is greater than the marginal cost the firm should increase production till both are equal.  

In case, marginal revenue is less than the marginal cost the firm should stop producing more and reduce production till both are equal.

3 0
3 years ago
When mcdonald's offered madame alexander gifts in its happy meals, both companies profited from the _____ arrangement?
Olin [163]

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6 0
4 years ago
Solve the equation 60%of 45
prohojiy [21]

Explanation:

60%of 45

0.6×45

=27

....................

7 0
3 years ago
Read 2 more answers
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