What is the percentage after tax return on each bond

Assignment Help Financial Management
Reference no: EM131884809

A corporate bond is providing a yield of 12% per year, while at the same time; a municipal bond (tax exempt) is yielding 9% per year.

Each bond only pays interest each year until the bond matures, at which time the principal investment will be returned. Each bond is equally risky, and your marginal tax bracket is 30% you have $1,000 to invest.

A) What is the after tax cash flow from each bond? Which bond would you invest?

B) What is the percentage after tax return on each bond?

C) What before tax equivalent on the corporate bond would make you choose it as an investment?

D) Suppose that you are also subject to a 5% state tax from which neither the corporate or municipal bond is tax exempt. What is the after tax return on each bond?

Reference no: EM131884809

Questions Cloud

What is the fair price for one of cyberdynes zero coupon : Cyberdyne Systems is issuing a series of zero coupon bonds to raise? $500M to fund research and development at its Skynet division.
Determine total number of units that company has to produce : Jon inc makes soccer balls, its sales and contribution margin is as follows. Determine the total number of units that the company has to produce to break even.
What is the exercise value of an abc call option : Suppose you buy 10 contracts of the February 115 call option. How much will you pay, ignoring commissions?
How much joint cost will be allocated to product a : Assuming joint costs are allocated on the basis of units produced, how much joint cost will be allocated to Product A for inventory valuation purposes?
What is the percentage after tax return on each bond : A corporate bond is providing a yield of 12% per year, while at the same time; a municipal bond (tax exempt) is yielding 9% per year.
Prepare journal entries for jolis : Prepare journal entries for Jolis for 2016. The company uses the straight-line method of amortization computed to nearest month over the maximum allowable life.
What is the free cash flow : The company also had an increase in net working capital of $20 million. What is the free cash flow?
What is the range of possible values for pacificorp : what is the range of possible values for PacifiCorp? What questions might you have about this range?
How much of the annual payment is interest : Jonathan borrowed $15,000 at 8% annual compound interest. How much of the annual payment is interest, and how much principal is there in each annual payment?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd