Question 12 Suppose a foreign investor who holds tax-exempt Eurobonds paying 9%

Question

Question 12

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?
Answer 9.00%
10.20%
11.28%
12.50%
13.57%


.2 points
Question 13

Which of the following is NOT a reason why companies move into international operations?
Answer To take advantage of lower production costs in regions where labor costs are relatively low.
To develop new markets for the firm

Explanation / Answer

11.28% To better serve their primary customers.

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