a. If an investor can earn 0.08 by investing in tax-exempt bonds, a corporation investing in comparable
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a. If an investor can earn 0.08 by investing in tax-exempt bonds, a corporation investing in comparable risk investments would have to earn what minimum return(s) after corporate tax to justify retention? Assume that the investor is in a 0.55 tax bracket for ordinary income and that all income from the corporation will be received in the form of cash dividends.
b. If new capital is raised and if the investment banker takes 0.10 of the price paid by the investors, the investment made by the corporation must earn ___________ after corporate tax.
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a Minimum Required Return To justify retention of the investment the corporation must earn a return ...View the full answer
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