FOCUS ON PERSONAL FINANCE LL/ACCESS >BI
6th Edition
ISBN: 9781260529326
Author: Kapoor
Publisher: McGraw-Hill Publishing Co.
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Chapter 11, Problem 4P
Summary Introduction
To determine: Taxable equivalent yield for the investment.
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Assume you are in the 35 percent tax bracket and purchase a 3.60 percent municipal bond. Use the formula presented in this chapter to calculate the taxable equivalent yield for this investment.
Assume your in the 35% tax bracket and purchased a municipal bond with a yield of 3.60. What is the taxable equivalent yield for this investment?
you invest in a municipal bond that pays a yield of 10%. If your marginal tax is 26%, what is the equIvalent yield on the taxable bond? (write your answer in percentage and round it to 2 decimal places)
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- For a taxpayer in the 25% marginal tax bracket, a 20-year municipal bond currently yielding 5.5% would offer an equivalent taxable yield of A. 10.75%. B. 5.5%. C. 7.33%. D. 4.125%.arrow_forwardA municipal bond carries a coupon of 6.75% and is trading at par. What is the equivalent taxable yield to a taxpayer in a combined federal plus state 34% tax bracket?arrow_forwardSuppose you invest in a municipal bond that pays a yield of 4. If your marginal tax is 17%, what is the equvalent yield on the taxable bond? (write your answer in percentage and round it to 2 decimal places)arrow_forward
- You can invest in taxable bonds that are paying a yield of 9.7 percent or a municipal bond paying a yield of 7.95 percent. Assume your marginal tax rate is 21 percent. a. Calculate the after-tax rate of return on the taxable bond? (Round your answer to 2 decimal places. (e.g., 32.16))b. Which security bond should you buy?arrow_forwardFind the equivalent taxable yield of a short-term municipal bond currently offering yields of 4% for tax brackets of (a) zero, (b) 10%, (c) 20%, and (d) 30%.arrow_forwardYou purchase a tax-free municipal bond paying an annual rate of 6 percent. Find the before-tax rate if you are in the 15-percent tax bracket. 28-percent tax bracket. 36-percent tax bracket.arrow_forward
- An investor is trying to decide between a muni paying 6.20 percent or an equivalent taxable corporate paying 8.25 percent. What is the minimum marginal tax rate the investor must have to consider buying the municipal bond? Group of answer choices 20.0 percent 66.7 percent 80.0 percent 25.0 percent 75.0 percentarrow_forwardThe current yield on a municipal bons is 6%. What would the equivalent taxable yield of this bond to a taxpayer in a 35% tax bracket? Enter your answer as a decimal not percentage and round your answer to 4 decimal placesarrow_forwardYou can invest in taxable bonds that are paying a yield of 9.50 percentor a municipal bond paying a yield of 7.75 percent. If your marginaltax rate is 21 percent,which security bond should you buy?arrow_forward
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