Find the aftertax yields for the three investment options

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The Omega Corporation has some excess cash it would like to invest in marketable securities for a long-term hold. Its Vice-President of Finance is considering three investments:

(a) Treasury bonds at a 7 percent yield;

(b) corporate bonds at a 14 percent yield; or

(c) preferred stock at an 9 percent yield.

Omega Corporation is in a 30 percent tax bracket and the tax rate on dividends is 15 percent.

Problem 1: Compute the aftertax yields for the three investment options. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)

Treasury Bonds =4.90%
Corporate Bonds =9.80%

Reference no: EM132988391

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