Question

In: Finance

A corporation recently purchased some preferred stock that has a before-tax yield of 8.5%. The company...

A corporation recently purchased some preferred stock that has a before-tax yield of 8.5%. The company has a tax rate of 40%. What is the after-tax return on the preferred stock? A. 7.48% B. 6.65% C. 7.04% D. 7.74% E. 7.28%

Solutions

Expert Solution

SEE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 4 months ago
Next > < Previous

Related Solutions

Carmen Company is a corporation that has issued both preferred and common stock. As of January...
Carmen Company is a corporation that has issued both preferred and common stock. As of January 1, it had 50,000 shares of 2.75%, $100 par, preferred stock outstanding and 250,000 shares of $10 par common stock outstanding. a. On January 31, the board of directors issues a requirement to purchase 5,000 shares of its common stock at market price. The shares are purchased at a market price of $22 per share. Journalize the purchase utilizing the cost concept. Jan. 31...
Find the after-tax return to a corporation that buys a share of preferred stock at $52,...
Find the after-tax return to a corporation that buys a share of preferred stock at $52, sells it at year-end at $52, and receives a $7 year-end dividend. The firm is in the 30% tax bracket. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
The treasurer of Kelly Bottling Company (a corporation) currently has $350,000 invested in preferred stock yielding...
The treasurer of Kelly Bottling Company (a corporation) currently has $350,000 invested in preferred stock yielding 8 percent. He appreciates the tax advantages of preferred stock and is considering buying $350,000 more with borrowed funds. The cost of the borrowed funds is 9 percent. He suggests this proposal to his board of directors. They are somewhat concerned by the fact that the treasurer will be paying 1 percent more for funds than the company will be earning on the investment....
Joe has common stock and preferred stock outstanding. The preferred stock has a par value of...
Joe has common stock and preferred stock outstanding. The preferred stock has a par value of $100, a dividend rate of 4.5%, and is cumulative. During the past 3 years, Joe declared and paid dividends provided at left. Compute the amount of dividends paid to preferred and common shareholders each year. Preferred stock: Par value $100 Dividend rate 4.5% Shares outstanding 100,000 Dividends declared and paid: Year 1 400,000 Year 2 100,000 Year 3 1,250,000
MJI Corporation bonds mature in 6 years and have a yield to maturity of 8.5 percent....
MJI Corporation bonds mature in 6 years and have a yield to maturity of 8.5 percent. The par value of the bonds is $1,000. The bonds have a 10 percent coupon rate and pay interest on a semi-annual basis. Assuming there are no changes to interest rates during the course of the year, what are the current yield and capital gains on the bonds for this year?
MJI Corporation bonds mature in 6 years and have a yield to maturity of 8.5 percent....
MJI Corporation bonds mature in 6 years and have a yield to maturity of 8.5 percent. The par value of the bonds is $1,000. The bonds have a 10 percent coupon rate and pay interest on a semi-annual basis. Assuming there are no changes to interest rates during the course of the year, what are the current yield and capital gains yield on the bonds for this year?
12. MJI Corporation bonds mature in 6 years and have a yield to maturity of 8.5...
12. MJI Corporation bonds mature in 6 years and have a yield to maturity of 8.5 percent. The par value of the bonds is $1,000. The bonds have a 10 percent coupon rate and pay interest on a semi-annual basis. Assuming there are no changes to interest rates during the course of the year, what are the current yield and capital gains yield on the bonds for this year? 13. Bond Relationships. Select one or more of the following phrases...
Vigor Corporation reports a net income before tax for 2020 of $512,800, has a tax rate...
Vigor Corporation reports a net income before tax for 2020 of $512,800, has a tax rate of 21% and provides the following selected information (covers the three tax difference items) from its ledger as at December 31, 2019 and 2020:                                                                                                     2019             2020                         Equipment, at cost                                  900,000 DR 900,000 DR                         Accumulated depreciation, equipment    450,000 CR 525,000 CR                         Deferred Tax Asset                                   10,080 DR                   ?                         Warranty Liability                                     48,000 CR    56,000 CR                         Deferred Tax Liability                              47,250 CR                  ...
Parker Corporation has issued 1,700 shares of common stock and 340 shares of preferred stock for...
Parker Corporation has issued 1,700 shares of common stock and 340 shares of preferred stock for a lump sum of $62,000 cash. Give the entry for the issuance assuming the par value of the common stock was $5 and the fair value $30, and the par value of the preferred stock was $40 and the fair value $50. (Each valuation is on a per share basis and there are ready markets for each stock.) (Credit account titles are automatically indented...
Bluefield Corporation has 6 million shares of common stock outstanding, 600,000 shares of preferred stock that...
Bluefield Corporation has 6 million shares of common stock outstanding, 600,000 shares of preferred stock that pays an annual dividend of $8, and 200,000 bonds with a 10 percent coupon (semiannual interest) and 20 years to maturity. At present, the common stock is selling for $50 per share, the bonds are selling for $950.62 per $1,000 of face value, and the preferred stock is selling at $74 per share. The estimated required rate of return on the market is 13...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT