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liubo4ka [24]
3 years ago
11

A corporate bond currently yields 8.5 percent. Tax-except municipal bonds with the same risk, maturity, and liquidity currently

yield 5.5 percent. At what tax rate would investors be indifferent between the two bonds? a. 35.29% b. 40.00% c. 24.67% d. 64.71% e. 30.04%
Business
1 answer:
3241004551 [841]3 years ago
4 0

Answer:

a. 35.29%

Explanation:

The computation of the tax rate that could be non-different between the two bonds is shown below:

Given that

Corporate Bond yield = 8.5%

Municipal bonds yield = 5.5%

based on the above information

Tax Rate  is

= 1 - ( Municipal bonds yield - Corporate Bond yield)

= 1 - (5.5% ÷ 8.5%)

= 35.29%

Hence, the tax rate is 35.29%

We simply applied the above formula so that the correct value could come

And, the same is to be considered  

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In its first month of operations, Wildhorse Co. made three purchases of merchandise in the following sequence: (1) 370 units at
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Answer:

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