After-tax return on the best investment alternative

Assignment Help Financial Management

Reference no: EM131943017

Arash Corporation is trying to choose between three alternative investments. The three securities that the company is considering are as follows:

• Tax-free municipal bonds with a return of 7.30%.

• Ray Corporation bonds with a return of 10.90%.

• Rez Corp. preferred stock with a return of 11.50%.

The company’s tax rate is 25% and dividend exclusion rate is 70%. What is the after-tax return on the best investment alternative? Show all work.

Reference no: EM131943017

Questions Cloud

What is current stock price : Investors require a return of 11 percent on the company’s stock. What is the current stock price? What will the stock be in 3 years?

Difference between micro and micro environments of retailers : What is the difference between Micro and Micro Environments of retailers?

Discretionary financing needs will be higher : Discretionary financing needs will be higher if ________. Assume "all else equal." A

What relationship is between interest rates and bond prices : Discuss how bond prices are determined in the market, what the relationship is between interest rates and bond prices,

After-tax return on the best investment alternative : The company’s tax rate is 25% and dividend exclusion rate is 70%. What is the after-tax return on the best investment alternative?

What is present value of consecutive annual payments : What is the present value of 5 consecutive annual payments of $1200 made at the end of each year

Company after-tax dividend income on the preferred : What is the company's after-tax dividend income on the preferred, assuming a 70% dividend exclusion?

Discounted dividend model and corporate valuation model : Identify the two models that can be used to estimate a stock’s intrinsic value: the discounted dividend model and the corporate valuation model.

What is the current stock price : Investors require a return of 11 percent on the company’s stock. What is the current stock price? What will the stock be in 3 years?

User Account

All Pages