Assume That Juanita Is Indifferent Between Investing in a Corporate

question 106

Multiple Choice

Assume that Juanita is indifferent between investing in a corporate bond that pays 8.40 percent interest and a stock with no growth potential that pays a 6.30 percent dividend yield. Assume that the tax rate on dividends is 15 percent. What is Juanita's marginal tax rate?(Do not round intermediate computations.)

• A)36.25 percent
• B)26.22 percent
• C)16.19 percent
• D)8)10 percent
• E)None of the choices are correct.

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