QUESTION 18 Solarcell Corporation has $20,000 which it plans to invest in marketable securities. It...
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QUESTION 18 Solarcell Corporation has $20,000 which it plans to invest in marketable securities. It is choosing between AT&T bonds which yield 11%, State of Florida municipal bonds which yield 8%, and AT&T preferred stock with a dividend yield of 9% Solarcoll's corporate tax rate is 40%, and 70% of the preferred stock dividends it receives are tax exempt Assuming that the investments are equally risky and that Solarcell chooses strictly on the basis of after-tax returns, which security should be selected? Answer by giving the after-tax rate of return on the highest yielding security a. 8.46% b.8.00% Oc792% d. 9.00% D e. 9.16%
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