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:

Cognitive Scripts

Mental representations of sequences of events or actions, guiding behavior and understanding in specific contexts.

Hierarchy Of Needs

A theory in psychology proposed by Abraham Maslow, which outlines a five-tier model of human needs, from basic physiological needs to self-actualization.

Conditions Of Worth

Carl Rogers' term for the conditions we think we must meet for other people to accept us as worthy of their love or positive regard.

Constructive Alternativism

A psychological theory suggesting that people have the ability to interpret their experiences in many ways, supporting the concept of multiple realities.