A corporation can earn 7.5% if it invests in municipal bonds. The corporation can also earn 8.5% (before tax) by investing in preferred stock. Assume that the two investments have equal risk. What is the break-even corporate tax rate which makes the corporation indifferent between the two investments?
2006-09-30 15:48:31 · 4 answers · asked by JaimeD 1 in Business & Finance ➔ Taxes ➔ United States
basicly the homework questions asks how much percent reduction would taxes have to cause to make the 8.5% yield look like 7.5% after taxes so the answer i (8.5-7.5)/8.5*100 which equals 11.7%
2006-09-30 19:59:08 · answer #1 · answered by ken 3 · 2⤊ 1⤋
First you need to get your tax regulations out and find out what the corporate tax bracket are. Then use some algebra to determine your answer.
Now get your homework done.
2006-10-02 08:18:21 · answer #2 · answered by dillon Y 3 · 0⤊ 2⤋
This sounds like a homework question. And if you're taking a tax course, you should be able to figure out the answer.
2006-09-30 17:12:55 · answer #3 · answered by Judy 7 · 0⤊ 4⤋
28% look at the table structure
2006-10-03 22:45:44 · answer #4 · answered by Anonymous · 0⤊ 2⤋