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Alina [70]
4 years ago
14

Corporate bonds issued by Johnson Healthcare currently yield 8 percent. Municipal bonds of equal risk currently yield 6 percent.

At what tax rate would an investor be indifferent between these two bonds?
Business
1 answer:
Vedmedyk [2.9K]4 years ago
3 0

Answer:

a tax-rate for 25% will make the investor be indifferent between there two bonds

Explanation:

The Municipal bonds are tax free. Therefore, do not pay the income tax for their interest.

We need to set and equation for the net yield of the bonds after tax, which equal the municipal bond:

debt after tax:

cost of debt ( 1 - t) = after-tax

we want to equalize 8% pre-tax with 6% after-tax

0.08 ( 1 - t ) = 0.06

t = 1 - 0.06/0.08 = 1 - 0.75 = 0.25 = 25%

a tax-rate for 25% will make the investor be indifferent between there two bonds

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Answer:

(C) Pepin The Short

Explanation:

In 741AD, Pepin took over from his father as Mayor of the Palace. He ruled alongside his elder brother.

In 743AD, Pepin and his brother chose Childeric to be the <em>apparent</em> King of the Franks. Both brothers still wielded the functional power to the throne. Childeric was just to 'appear to be' the King (unknown to him though).

In 747AD, Pepin's brother stepped down (intentionally and on his own accord). Pepin then became the only ruler of the entire Frankish territory.

In 751AD, Pepin, without full support from his clan, lured Childeric into monastery in order to remove him as the 'face of Francia'.

Pope Zacharias helped Pepin to be proclaimed King of the Franks, against all opposition.

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3 years ago
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3 years ago
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