The Shrieves Corporation has $15,000 that it plans to invest in marketable securities. It is choosing among AT&T bonds (which yield 8.7%), AT&T preferred stock (with a dividend yield of 8.0%), and state of Florida muni bonds (which yield 7% but are not taxable).
The federal tax rate is 21% (ignore any possible state corporate taxes).
Recall that 50% of dividends received are tax exempt. Find the after-tax rates of return on all three securities after paying federal corporate taxes. Round your answers to three decimal places.
After-tax rate of return on AT&T bond: % After-tax rate of return on AT&T preferred stock: % After-tax rate of return on Florida muni bonds: %
