Susan Brown Has Decided That She Would Like to Go

Essay

Susan Brown has decided that she would like to go back to school after her kids leave home in five years. To save for her education, Susan would like to invest $25,000 in an investment that provides a high return. If her marginal tax rate is 35 percent, what is Susan's after-tax rate of return for the following investment options? Qualified dividends are taxed at 15 percent.
(1)Corporate bond issued at face value with 15 percent stated interest rate payable annually.
(2)Dividend-paying stock with an annual qualifying dividend equal to 8 percent of her investment.
(3)Growth stock with an annual growth rate of 8.2 percent and no dividends paid. (Round your intermediate calculations to the nearest whole number.)