Granville Co. recently purchased several shares of Kalvaria Electronics'...

[sandra]

...preferred stock. The preferred stock? Granville Co. recently purchased several shares of Kalvaria Electronics' preferred stock. The preferred stock has a before-tax yield of 7.6%. If the company's tax rate is 25%, what is Granville Co.'s after-tax yield on the preferred stock?

 

[JoeyV]

Thye pay 25% tax on 30% of 7.6% = 0.25*0.30*0.076 = 0.57% so their after-tax yield is 7.03%