Assume that there are three groups of investors with the following tax rates and investable funds:


Assume that there are three classs of investors delay the aftercited tax objurgates and investable funds:

Group

Investable Funds (in $ darlings)

Tax Objurgate (percent)

A

375

50

B

220

32.5

C

105

10

Each class requires a incompleteness after-tax requite of 8.1 percent on any safeguard. The solely types of securities suited are vulgar store and enduring urbane bonds. Income from urbane bonds is matter to a particular tax, but it is deductible for urbane tax purposes. Capital gains from vulgar store are untaxed at the particular plane. In makeweight, vulgar store yields an 8.1 percent pretax requite; exotic developed demesne also earns this objurgate. All funds not invested in stores or bonds earn be invested in exotic developed demesne. Assume the vulgar store and the bonds are twain risk-free. Urbane rights antecedently share and taxes completion $85 darling each year in persistence. The urbane tax objurgate is 35 percent.

a. What is the makeweight negotiate objurgate of share on urbane bonds, rB?

b. In makeweight, what is the adjustment of each of the classs’ portfolios?

c. What is the completion negotiate rate of all companies?

d. What is the completion tax account?