Susan Brown Has Decided That She Would Like to Go

question 88

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 $26,000 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 16 percent stated interest rate payable annually.
(2)Dividend-paying stock with an annual qualifying dividend equal to 9 percent of her investment.
(3)Growth stock with an annual growth rate of 8.4 percent and no dividends paid. (Round your intermediate calculations to the nearest whole number.)

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Definitions:

Collective Conscience

A collection of common values, thoughts, and ethical stances that act as a cohesive influence within a community.

Durkheim

A French sociologist, social psychologist, and philosopher who is considered one of the founding fathers of sociology.

Marx

Karl Marx was a 19th-century philosopher, economist, and revolutionary, best known for his works on capitalism and communism as well as for founding Marxist theory.

Religious Practice

Religious practice refers to the actions, rituals, and ceremonies individuals or communities partake in as part of their adherence to the beliefs and tenets of a religion.