Suppose a foreign investor who holds tax-exempt Eurobonds paying 9% is considering investing in an equivalent-risk domestic bond in a country with a 28% withholding tax on interest paid to foreigners. If 9% 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. 9.00%
B. 10.20%
C. 11.28%
D. 12.50%
E. 13.57%


Answer: D

Business

You might also like to view...

Both consumers and businesses have market needs, and the factors influencing their needs are essentially the same

Indicate whether the statement is true or false

Business

The price of one currency expressed in terms of the other currency is known as the _____________ quotation.

Fill in the blank(s) with the appropriate word(s).

Business

Monthly or weekly service schedule is the ______ set of decisions in the hierarchy of operations decision for ______ organizations.

A. last; manufacturing B. first; manufacturing C. last; service D. first; service

Business

The sum of two component costs-separation and replacement-represents the total cost of employee turnover for the period in question.

Answer the following statement true (T) or false (F)

Business