Tax MCQ Tax Chapter 3 Assume that Will's marginal tax rate is 32% and his tax rate on dividends is 15%. If a dividend- paying stock (with no growth potential) pays a dividend yield of 8%, what interest rate must the corporate bond offer for Will to be indifferent between the two investments?

Assume that Will's marginal tax rate is 32% and his tax rate on dividends is 15%. If a dividend- paying stock (with no growth potential) pays a dividend yield of 8%, what interest rate must the corporate bond offer for Will to be indifferent between the two investments?

Tax Chapter 3

Assume that Will's marginal tax rate is 32% and his tax rate on dividends is 15%. If a dividend- paying stock (with no growth potential) pays a dividend yield of 8%, what interest rate must the corporate bond offer for Will to be indifferent between the two investments?

A. 12%

B. 11%

C. 10%

D. 8%

E. None of these

Answer: C

Tax MCQ

Assume that Will's marginal tax rate is 32% and his tax rate on dividends is 15%. If a dividend- paying stock (with no growth potential) pays a dividend yield of 8%, what interest rate must the corporate bond offer for Will to be indifferent between the two investments?

Assume that Will&#39;s marginal tax rate is 32% and his tax rate on dividends is 15%. If a dividend- paying stock (with no growth potential) pays a dividend yield of 8%, what interest rate must the corporate bond offer for Will to be indifferent between the two investments?

Learn More :

Share this

Assume that Will's marginal tax rate is 32% and his tax rate on dividends is 15%. If a dividend- paying stock (with no growth potential) pays a dividend yield of 8%, what interest rate must the corporate bond offer for Will to be indifferent between the two investments?