Arvo Corporation Is Trying to Choose Between Three Alternative Investments

question 112

Multiple Choice

Arvo Corporation is trying to choose between three alternative investments.The three securities that the company is considering are as follows:
∙Tax-free municipal bonds with a return of 8.8%.
∙Wooli Corporation bonds with a return of 11.75%.
∙CFI Corp.preferred stock with a return of 9.8%.
The company's tax rate is 25%.What is the after-tax return on the best investment alternative?

• A)7.383%
• B)7.772%
• C)8.181%
• D)8.612%
• E)9.065%

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