A tax-exempt municipal bond has a yield to maturity of 4.22%. An investor, who has a marginal tax rate of 33.00%, would prefer a
1 answer:
Answer:
yield to maturity of more than 6.29%
Explanation:
given data
maturity = 4.22% = 0.0422
marginal tax rate = 33.00% = 0.33
solution
as here we get the yield to maturity of corporate bonds when tax rate is 33% that is
yield to maturity of corporate bonds = maturity ÷ ( 1- marginal tax rate ) ...............1
put here value and we will get
yield to maturity of corporate bond =
yield to maturity of corporate bond = 0.062985
yield to maturity of corporate bond = 6.29 %
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Answer:
Revenue due to investment in Dubro = $22,000
Explanation:
In the given case, revenue to be recorded will be based on calculation as follows:
Since investment in equity is 40% of total share, equity method will be used.
In such method all income share in equity and preference dividend will form part of income for the current year.
Dividend = $10,000 20% as invested in preference capital.
= $2,000
Share in income = $50,000 40% as invested in equity = $20,000
Note: Dividend will be deducted from net income as net income for equity
Net income - Dividend = $60,000 - $10,000 = $50,000
Thus, net share of income = $2,000 + $20,000 = $22,000