The XYZ Corporation has $100,000 which it plans to invest in marketable securities. The corporation is choosing between the following three equally risky securities: Greenville County tax-free municipal bonds yielding 7 percent; AB corp. bonds yielding 11.5 percent; XZ corp. preferred stock with a dividend yield of 10 percent. XYZ's corporate tax rate is 35 percent. What is the after-tax return on the best investment alternative?© BrainMass Inc. brainmass.com June 3, 2020, 10:54 pm ad1c9bdddf
Greenville County tax-free municipal bonds yielding 7 percent
Since these are tax-free the after tax yield is the same as 7%
AB corp. bonds ...
The solution explains how to calculate the after tax return and choose the best alternative