Multiple Choice
West Corporation has $50,000 that it plans to invest in marketable securities.The corporation is choosing between the following three equally risky securities: Alachua County tax-free municipal bonds yielding 8.50%;Exxon Mobil bonds yielding 10.50%;and GM preferred stock with a dividend yield of 9.25%.West's corporate tax rate is 32.00%.What is the after-tax return on the best investment alternative? Assume a 70.00% dividend exclusion for tax on dividends.(Assume the company chooses on the basis of after-tax returns.Round your final answer to 3 decimal places. )
A) 9.690%
B) 7.820%
C) 8.585%
D) 8.500%
E) 10.625%
Correct Answer:
Verified
Correct Answer:
Verified
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