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Gelneren [198K]
3 years ago
12

A corporation can earn 7.5% if it invests in municipal bonds. The corporation can also earn 8.30% (before-tax) by investing in p

referred stock. Assume that the two investments have equal risk. What is the break-even corporate tax rate that makes the corporation indifferent between the two investments? Assume a 70% dividend exclusion for tax on dividends. (Do not round your intermediate answer and round your final answer to two decimal places.)
Business
1 answer:
Kryger [21]3 years ago
3 0

Answer:

32.13%

Explanation:

The computation of the break-even corporate tax is shown below:

As we know that

Municipal bond return = preferred stock return before tax  × [1 - (1 - dividend exclusion) × Break even corporate tax]

7.5 = 8.30 ×  [1 - ( 1 - 0.70) × Break even corporate tax ]

7.5 ÷ 8.30 = 1 - 0.30 × Break even corporate tax

0.9036 = 1 - 0.30 × Break even corporate tax

0.30 × Break even corporate tax = 1 - 0.9036

So, Break even corporate tax is

= 0.0964 ÷ 0.30

= 32.13%

Basically we applied the above formula

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What is the 2016 repayment limitation for a single taxpayer who has income at a 350% poverty level?
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The correct answer to this question is $1250. To prove this, an image is attached together with this answer. 

<span>The 2016 repayment limitation for a single taxpayer who has income at a 350% poverty level is $1250. Based on the image, it shows that at the line of at least 300% but less than 400%, the repayment limit of single tax payer is $1250.</span>

3 0
2 years ago
What do you learn in business writing class?
Deffense [45]

Answer:

Explanation:

There are a variety of sub categories/goals that you will learn in business writing class and they are the following

  • Learning to effectively write emails, letters, memos, reports.
  • Learning to logically, efficiently, and effectively organize your gathered information and ideas.
  • Learning how to correctly identify and choose the appropriate communication strategy, format, style, and content for the specific scenario.
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4 0
3 years ago
The following financial information is available for Flint Corporation.
kotegsom [21]

Answer:

dividends payout ratio = total dividends / net income

  • dividends payout ratio 2016 = $630 / $685 = 0.9197 = 91.97%
  • dividends payout ratio 2017 = $335 / $605 = 0.5537 = 55.37%

return on equity = (net income - preferred dividends) / average equity

  • return on equity 2016 = ($685 - $45) / $2,925 = 0.2188 = 21.88%
  • return on equity 2017 = ($605 - $45) / $2,825 = 0.1982 = 19.82%
3 0
3 years ago
The money supply in Macroland is currently 2,500, bank reserves are 200, currency held by public is 500, and banks' desired rese
Rom4ik [11]

Answer:

Purchase of 300

Explanation:

Given,

Money Supply is 2,500

Bank's deposit ratio is 0.20

Bank reserve is 200

Currency held by public is 500

Increase in the money supply is 3,000

Bank Deposit (BD) = Bank reserve / Bank's deposit ratio

= 200 / 0.20

= 1,000

Money Supply = Bank Deposit + Currency held by public

= 1,000 + 500

= 1,500

Purchase of 300

Then New BD = 500 / 0.20

= 2,500

New Money supply = 2,500 + 500

= 3,000

So, in order to increase the money supply to 3,000, should conduct the open market purchase of 300 bonds.

7 0
3 years ago
Luis and Amy are programmers employed by X Corp. They work in cubicles next to each other. Both have M.Sc. degrees in computer s
MAXImum [283]

Answer:

If Amy sues X Corp. because of the pay differential, what must she show?

The Equal Pay Act of 1963 prohibits discrimination in payment on the basis of gender (and race and origin also). In this case, Amy must prove that her work requires the same skills as Luis's and that it provides the same value to the company. They both have a master's degree in computer science, but she must also show that Luis's Ph.D. is not important to their work.

What might the company argue in defense?

The company might argue two things:

  1. That Luis has a higher education degree, since he has a Ph.D.
  2. That Luis's work is more specialized since he codes games, while Amy codes different projects. They would have to prove that the games that Luis codes are much more profitable and valuable to the company than the work Amy does.

Who should win?

If their work is similar, then Amy should win. If they are basically both doing the same job and require the same skills, therefore, the salary should be the same.

But if Luis's work is much more relevant and profitable for the company, then Amy would lose. If this is true, they might have to change Luis's compensation and reduce his salary but increase bonus compensation. This is true in all companies (or the vast majority of), e.g. the quarterback receives the highest salary since his job is more important for the team.

7 0
3 years ago
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