After tax-rates of return

Related BrainMass Solutions

• Compare the after-tax rates of return for a corporate investor from the following two investments: A twenty-year, corporate bond that sells for par and offers a 9% coupon versus an investment in preferred stock that sells for $40.00 per share and pays a $2.40 dividend. The corporation has a 35% tax rate.

  Return from bond is taxable and the after-tax rates of return of bond is Rb = r * (1-t) = 9% * (1-35%) = 5.85% However, the preferred stock is not taxable and the rates of return of it is Rp = D/P = 2.40 / 40.00 = 6% Thus, the after-tax rates of

• NPV of an investment at two different marginal tax rates

  value of after tax return if the tax rate is 15% Year Before tax After tax 0 -20000 -20000 1 16000 13600 2 16000 13600 3 16000 13600 Cost of Capital 6% NPV= $16,352.96 Present value of after tax return if the tax rate

• What is the after-tax return of the auto ABS is for client?

  If my client moves to California and now is subject to a state marginal tax rate of 9.55%. what would happen to the following: What the new after-tax return of the auto ABS is for the client as a California resident Would you still select the same

• After-tax return on the preferred stock

  Also, we know that the after tax premium of 2.25% is the difference between the two rates.

• Rick and Stacy Stark, a married couple, are interested in pu

  However, the interest on the second mortgage will qualify as being tax-deductible on their federal income tax return. a. Calculate the after-tax cost of borrowing from the boat dealership. b.

• Portfolio analysis

  b) Suppose the preceding 10 percent return is taxable rather than tax-deferred. What will be the after tax value of his $10,000 investment after 5, 10, and 20 years?

• WACC Corrections- Case study-Sea Shore Salt

  However, interest is tax-deductible, so the after-tax interest rates are lower than shown above. For example, the after-tax cost of our bank financing, given our 35% tax rate, is 8(1 - .35) = 5.2%. The rate of return on preferred stock is 6%.

• Most likely effect of increase in income tax rates would be to

  482283 Most likely effect of increase in income tax rates would be to 1. Of the following, the most likely effect of an increase in income tax rates would be to? 2.

• WACC

  After tax cost of debt = before tax cost X (1-tax rate) The before tax cost of debt is the yield on bonds =9% After tax cost of debt = 9% X (1-0.35) = 5.85% We use CAPM to find the cost of equity Cost of equity = Risk free rate + (Market Return