Stan and Alicia can invest $40000 in preffered stock A which pay a dividend of $2000 a year, payable quarterly. They will re - invest the dividends in a savings account which presently earnes 3% compounded yearly. They expect the stock will reach a selling price of $44000 in 4 years. Assume a regular income marginal tax rate of 43%, and a dividend marginal tax rate of 17.45%, and a capital gains marginal tax rate of 21.5%. What is the after - tax EAR of this tock? Assume taxation is paid annually for the interests and dividends. (Calculate using HPR before and after tax) Ans: 5.72% ( Step by Step solution)
Stan and Alicia can invest $40000 in preffered stock A which pay a dividend of $2000 a year, payable quarterly. They will re - invest the dividends in a savings account which presently earnes 3% compounded yearly. They expect the stock will reach a selling price of $44000 in 4 years. Assume a regular income marginal tax rate of 43%, and a dividend marginal tax rate of 17.45%, and a capital gains marginal tax rate of 21.5%. What is the after - tax EAR of this tock? Assume taxation is paid annually for the interests and dividends. (Calculate using HPR before and after tax) Ans: 5.72% ( Step by Step solution)
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter13: Investing In Mutual Funds, Etfs, And Real Estate
Section: Chapter Questions
Problem 9FPE
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Stan and Alicia can invest $40000 in preffered stock A which pay a dividend of $2000 a year, payable quarterly. They will re - invest the dividends in a savings account which presently earnes 3% compounded yearly. They expect the stock will reach a selling price of $44000 in 4 years. Assume a regular income marginal tax rate of 43%, and a dividend marginal tax rate of 17.45%, and a
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