A Corporation Recently Purchased Some Preferred Stock That Has a Before-Tax

question 99

Multiple Choice

A corporation recently purchased some preferred stock that has a before-tax yield of 6.50%.The company has a tax rate of 38%.What is the after-tax return on the preferred stock? Assume a 70% dividend exclusion for tax on dividends.(Round your final answer to two decimal places. )

• A) 5.87%
• B) 5.76%
• C) 6.05%
• D) 6.68%
• E) 6.85%

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