Mantle Corporation is considering two equally risky investments: A $5,000 investment in preferred stock that yields 6.75%. A

Question

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.)
O a. 50.13%
O b. 46.87%
OC. 37.08%
Od. 34.23%
Oe. 40.75%

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