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After-tax return on the best investment alternative

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Reference no: EM132122783

Arvo 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 8.8%.
  • Wooli Corporation bonds with a return of 11.75%.
  • CFI Corp. preferred stock with a return of 9.8%.

The company's tax rate is 16.00%. What is the after-tax return on the best investment alternative? Assume a 70% dividend exclusion for tax on dividends. (Round your final answer to 3 decimal places.)

Reference no: EM132122783

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