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16 November, 03:58

You can invest in taxable bonds that are paying a yield of 9.4 percent or a municipal bond paying a yield of 7.65 percent. Assume your marginal tax rate is 21 percent. a. Calculate the after-tax rate of return on the taxable bond?

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  1. 16 November, 04:25
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    Answer for the question:

    You can invest in taxable bonds that are paying a yield of 9.4 percent or a municipal bond paying a yield of 7.65 percent. Assume your marginal tax rate is 21 percent. a. Calculate the after-tax rate of return on the taxable bond?

    is explained below.

    Explanation:

    the after-tax rate of return on the taxable bond = 9.4% * (1-0.21)

    the after-tax rate of return on the taxable bond = 7.426%
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