The Omega Corporation has some excess cash it would like to invest in marketable securities for
a long-term hold. Its Vice-President of Finance is considering three investments: (a) Treasury
bonds at a 7 percent yield; (b) corporate bonds at a 13 percent yield; or (c) preferred stock at an 9
percent yield. Omega Corporation is in a 40 percent tax bracket and the tax rate on dividends is
10 percent. a-1. Compute the aftertax yields for the three investment options. (Do not round
intermediate calculations. Input your answers as a percent rounded to 2 decimal places.).
The Omega Corporation has some excess cash it would like to invest i.pdf
1. The Omega Corporation has some excess cash it would like to invest in marketable securities for
a long-term hold. Its Vice-President of Finance is considering three investments: (a) Treasury
bonds at a 7 percent yield; (b) corporate bonds at a 13 percent yield; or (c) preferred stock at an 9
percent yield. Omega Corporation is in a 40 percent tax bracket and the tax rate on dividends is
10 percent. a-1. Compute the aftertax yields for the three investment options. (Do not round
intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)
