Investor be indifferent between these two bonds

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1. Nursing Home, an investor-owned healthcare organization, recently reported after-tax income of $4,750 and depreciation of $885. If its marginal tax rate is 40%, how much was its net cash flow?

a. $4,831.31

b. $5,353.25

c. $5,635.00

d. $5,085.59

2. Tech Inc. (HUM), a for-profit health care company who offers a range of insurance products and health and wellness services, recently issued bonds with a yield of 6%. Sam Hospital, a not-for profit health care enterprise, issued bonds of equal risk with a yield of 4%. 1). at what tax rate would an investor be indifferent between these two bonds? 2). which bond should an investor in the 30% tax bracket invest in?

A. 33.3%, Sam Hospital’s

B 50.0% Tech Inc

C. 50.0% Sam Hospital’s

D. 33.3%, Tech Inc

Reference no: EM131817231

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