Suppose a foreign investor who holds tax-exempt Eurobonds paying 10.50% is considering investing in an equivalent-risk domestic bond in a country with a 28.00% withholding tax on interest paid to foreigners. If 10.50% after-tax is the investor's required return, what before-tax rate would the domestic bond need to pay to provide the required after-tax return?
A. 15.46%
B. 16.33%
C. 16.92%
D. 12.83%
E. 14.58%
Answer: E
You might also like to view...
Identify the adjectives in the sentence. Beautiful boats with swelling sails dotted the coast of Long Island
What is the WACC for Bacon Signs Inc, if the after-tax cost of long-term debt is 6.3% and the before tax cost of equity is 10.4%
A) 8.02% B) 8.91% C) 9.58% D) Without a corporate tax rate, we cannot answer this question as written.
Which of the following statements about stock insurance companies is true?
A) Stockholders provide operating capital and receive dividends. B) They are nonprofit organizations. C) The insureds own the company. D) They are more likely to provide lower-cost insurance than mutuals.
A data mart is a(n):
A) enterprisewide data warehouse. B) smaller system built upon file processing technology. C) data warehouse that is limited in scope. D) generic online shopping site.