What Would the After-Tax Yield Be on an Investment That

question 63

Multiple Choice

What would the after-tax yield be on an investment that offers a 6 percent fully taxable yield? Assume a marginal tax rate of 31 percent.

• A) 2.79 percent
• B) 6.48 percent
• C) 4.14 percent
• D) 7.20 percent
• E) 12.50 percent

---

Definitions:

Net Assets

The total assets of an entity minus its total liabilities, representing the owners' equity in the company.

Goodwill

An intangible asset representing the excess of purchase price over the fair market value of identifiable assets and liabilities in a business acquisition.

Fair Value

The amount one would get from selling an asset or would need to spend to settle a liability in a well-organized sale involving market players on the date of evaluation.

Tax Rate

The fraction of earnings on which the government imposes taxes for individuals or corporations.