Mantle Corporation is considering two equally risky investments: ? A $5,000 investment in preferred stock that yields 6.75%.? A $5,000 investment in a corporate bond that yields 10.00%.What is the breakeven corporate tax rate that makes the company indifferent between the two investments? Assume a 70.00% dividend exclusion for tax on dividends. (Do not round your intermediate answer and round your final answer to two decimal places.)
A. 46.87%
B. 34.23%
C. 37.08%
D. 40.75%
E. 50.13%
Answer: D
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