Arvo Corporation is trying to choose between three alternative investments. The three securities that the company is considering are as follows: (1)(2)(3)The company's tax rate is 28 percent. What is the after-tax return on the best investment alternative?
A) 7.00%
B) 7.20%
C) 6.48%
D) 9.00%
E) 8.24%

Question

Quizplus · Accepted Answer

The after-tax return on the best investment alternative is 8.24%. This is calculated by taking the before-tax return of 9% and multiplying it by (1 - 0.28) = 0.72.

Arvo Corporation Is Trying to Choose Between Three Alternative Investments