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1. Assume that Keisha's marginal tax rate is 40% and her tax rate on dividends is...

1. Assume that Keisha's marginal tax rate is 40% and her tax rate on dividends is 25%. If a city of Atlanta bond pays 6.3% interest, what dividend yield would a dividend-paying stock (with no growth potential) have to offer for Keisha to be indifferent between the two investments from a cash-flow perspective? please show your work I am lost.

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Answer #1

Dividend yield*(1-25%)= 6.3%

Dividend yield= 6.3%/ 0.75

Dividend yield= 8.4%

So, the answer is 8.4%

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