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NeverEver Corporation is choosing between a taxable bond at the yield of 7% and a municipal bond at the yield of 5.75%. Calculate the NeverEver Corporation's break-even tax rate. g

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abiolataiwo2015

Answer:

18%

Explanation:

Calculation to determine the NeverEver Corporation's break-even tax rate.

Using this formula

Break-even tax rate=1- ( Municipal / Corporate )

Let plug in the formula

Break-even tax rate=1- (0.0575-0.07)=0.821429

Break-even tax rate=1-0.821429=0.178571

Break-even tax rate=0.178571 *100

Break-even tax rate= 17.8%

Break-even tax rate=18% Approximatel

Therefore the NeverEver Corporation's break-even tax rate is 18%

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