What is the after-tax yield on the bonds

Assignment Help Financial Management

Reference no: EM131044657

You are considering investing in taxable bonds. You are in the 40% tax bracket. The bonds carry a 15% interest rate.

What is the after-tax yield (interest rate) on the bonds? ______________________

Suppose you can also invest in non-taxable bonds. What rate would those bonds have to pay for you to breakeven with what the taxable bonds pay? __________________________

Reference no: EM131044657

Questions Cloud

Financing repayment plan requires equal monthly payments : You would like to purchase a car that costs $25,000. You have $5,000 to use as a down payment and have found financing for the remainder at a rate of 6.25%. The financing repayment plan requires equal monthly payments for 4 years. What will your paym..

What is the after-tax cost of capital to zephyr for bonds : The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The firm could sell new $1,00 par value bonds at a net price of $940. The coupon interest rate is 9 percent, and the bonds would mature in 11 years. If the ..

What is implied annual interest rate on futures contract : A Coca-Cola bond futures contract settles at 105-8. What is the present value of the Coca-Cola futures contract?What is the implied annual interest rate on the futures contract? Calculate the new value of the futures contract if interest rates increa..

Suppose firm is expected to increase dividends : Suppose a firm is expected to increase dividends by 10% for the next two years. After that dividends will increase at a rate of 5% per year indefinitely. If the last dividend was $1 and the required return is 20%, what is the price of the stock? Reme..

What is the after-tax yield on the bonds : You are considering investing in taxable bonds. You are in the 40% tax bracket. The bonds carry a 15% interest rate. What is the after-tax yield (interest rate) on the bonds?

About the capital asset pricing model : Which of the following statements about the capital asset pricing model (CAPM), which is the "father" of the security market line (SML), is(are) most correct?

What is the yield that trevor would earn by selling bonds : Trevor Price bought 10-year bonds issued by Harvest Foods five years ago for S989.89. The bonds make semiannual coupon payments at a rate of 8.4 percent. If the current price of the bonds is $1,024.25, what is the yield that Trevor would earn by sell..

Six-speed automatic transmission for automobiles offers : A new six-speed automatic transmission for automobiles offers an estimated 3% improvement in fuel economy compared to traditional four speed transmissions in front-wheel drive cars. If a four-speed transmission car averages 31 miles per gallon and ga..

Semiannual coupon bond matures : Price and yield An 6% semiannual coupon bond matures in 5 years. The bond has a face value of $1,000 and a current yield of 6.6956%. What is the bond's price? A chain of appliance stores, APP Corporation, purchases inventory with a net price of $250..

User Account

All Pages