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Assume that Shavonne's marginal tax rate is 37 percent and her tax rate on dividends...

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Accounting

Assume that Shavonne's marginal tax rate is 37 percent and her tax rate on dividends is 20 percent. If a corporate bond pays 9.4 percent interest, what dividend yield would a dividend-paying stock (with no growth potential) have to offer for Shavonne to be indifferent between the two investments from a cash-flow perspective?

Multiple Choice

6.27 percent

7.40 percent

9.40 percent

20.00 percent

None of the choices are correct.

Answer & Explanation Solved by verified expert
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