After-tax returns on securities


The Shrieve Corporation has $10,000 that it plans to invest in marketable securities. It is choosing among AT&T bonds, which yield 7.5%, state of Florida muni bonds, which yield 5%, and AT&T preferred stock, with a dividend yield of 6%. Shrieve's corporate tax rate is 35%, and 70% of the dividends received are tax exempt. Find the after-tax returns on both securities.

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Finance Basics: After-tax returns on securities
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