Solarcell Corporation has $20,000 which it plans to invest in marketable securities.It is choosing between AT&T bonds which yield 11%,State of Florida municipal bonds which yield 8%,and AT&T preferred stock with a dividend yield of 9%.Solarcell's corporate tax rate is 40%,and 70% of the preferred stock dividends it receives are tax exempt.Assuming that the investments are equally risky and that Solarcell chooses strictly on the basis of after-tax returns,which security should be selected? Answer by giving the after-tax rate of return on the highest yielding security.

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The Answer of Solarcell Corporation has $20,000 which it plans to invest in marketable securities.It is choosing between AT&T bonds which yield 11%,State of Florida municipal bonds which yield 8%,and AT&T preferred stock with a dividend yield of 9%.Solarcell's corporate tax rate is 40%,and 70% of the preferred stock dividends it receives are tax exempt.Assuming that the investments are equally risky and that Solarcell chooses strictly on the basis of after-tax returns,which security should be selected? Answer by giving the after-tax rate of return on the highest yielding security.

Solarcell Corporation Has $20,000 Which It Plans to Invest in Marketable