After-tax preferred yield


Problem:

An individual investing in preferred stock receiving a before-tax preferred yield of 8.5% and having a tax rate of 25% would receive an after-tax preferred yield of:

A) 8.5%

B) 7.2%

C) 8.2%

D) 7.9%

Note: Provide support for rationale.

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Accounting Basics: After-tax preferred yield
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