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Business, 27.06.2020 21:01 Sylnatius6736

A corporation can earn 7.5% if it invests in municipal bonds. The corporation can also earn 8.30% (before-tax) by investing in preferred stock. Assume that the two investments have equal risk. What is the break-even corporate tax rate that makes the corporation indifferent between the two investments? Assume a 70% dividend exclusion for tax on dividends. (Do not round your intermediate answer and round your final answer to two decimal places.)

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A corporation can earn 7.5% if it invests in municipal bonds. The corporation can also earn 8.30% (b...
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