Action inc. has $80 million in debt and 60% of its capital structure consists of common equity. the firm has no preferred stock. the firm’s bonds have a coupon rate of 9% and ytm of 8.5%, and the firm is subject to a 30% corporate tax rate. the firm has common stock with a beta of 1.25. the risk free rate on treasury bills is 4% and the expected market risk premium is 10%. what is the minimum after-tax rate of return that action must earn on its investments?

9. tax types: taxes are classified based on whether they are applied directly to income, called direct taxes, or to some other measurable performance characteristic of the firm, called indirect taxes. identify each of the following as a “direct tax,” an “indirect tax,” or something else: a. corporate income tax paid by a japanese subsidiary on its operating income b. royalties paid to saudi arabia for oil extracted and shipped to world markets c. interest received by a u. s. parent on bank deposits held in london d. interest received by a u. s. parent on a loan to a subsidiary in mexico e. principal repayment received by u. s. parent from belgium on a loan to a wholly owned subsidiary in belgium f. excise tax paid on cigarettes manufactured and sold within the united states g. property taxes paid on the corporate headquarters building in seattle h. a direct contribution to the international committee of the red cross for refugee relief i. deferred income tax, shown as a deduction on the u. s. parent’s consolidated income tax j. withholding taxes withheld by germany on dividends paid to a united kingdom parent corporation