A Corporation in a 34% Tax Bracket Invests in the Preferred

Multiple Choice

A corporation in a 34% tax bracket invests in the preferred stock of another company and earns a 6% pretax rate of return. An individual investor in a 15% tax bracket invests in the same preferred stock and earns the same pretax return. The after-tax return to the corporation is ________, and the after-tax return to the individual investor is ________.

A) 3.96%; 5.1%
B) 5.39%; 5.1%
C) 6%; 6%
D) 3.96%; 6%