Assume that Lucas's marginal tax rate is 32 percent and his tax rate on dividends...
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Accounting
Assume that Lucas's marginal tax rate is 32 percent and his tax rate on dividends is 16 percent. If a dividend-paying stock (with no growth potential) pays an 6.8 percent dividend yield, what interest rate would a municipal bond have to offer for Lucas to be indifferent between the two investments from a cash-flow perspective?
Multiple Choice
32.00 percent
15.00 percent
6.80 percent
5.71 percent
None of the choices are correct.
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