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Question - Tammy, a resident of Oregon, is considering purchasing a $100,000 California bond that yields 4.6% before tax. She is in the 35% Federal marginal tax bracket and the 5% state marginal tax bracket. She is aware that State of Oregon bonds of comparable risk are yielding 4.5%. However, the Oregon bonds are exempt from Oregon tax, but the California bond interest is taxable in Oregon. Tammy can deduct any state taxes paid on her Federal income tax return. In your analysis, assume the bond amount is $100,000.
If required, round your computations and answers to the nearest dollar. Determine the after tax income from each bond.
Which of the two options will provide the greater after-tax return to Tammy?
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
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Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
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CAPM and Venture Capital
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