Corporate after-tax yield

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Corporate After-Tax Yield

The Shrieves Corporation has $20,000 that it plans to invest in marketable securities. It is choosing among AT&T bonds, which yield 8.75%, state of Florida muny bonds, which yield 6% (but are not taxable), and AT&T preferred stock, with a dividend yield of 7.25%. Shrieves's corporate tax rate is 40%, and 70% of the dividends received are tax exempt. Find the after-tax rates of return on all three securities. Round your answers to two decimal places. Struggling with these finance questions.

Reference no: EM13987762

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