ANSWER:
Tax exempt bond yield = Taxable bond yield * (1 - tax rate) = 8% * (1 - 25%) = 8% * 0.75 = 6%
Hence the correct answer is option 2 that is 6%.
7. Suppose the tax rate is 25% and the taxable bond yield is 8% What is...
s Calculation (20%) Table 2.2 Tax-Exempt Yield Equivalent taxable yields corresponding to various tax-exempt yields 2% 3% 4% 5% 1% Marginal Tax Rate 125% 2.50% 3.75% 5.00% 6.25% 20% 30 1,43 2.86 4.29 5.71 7.14 40 1.67 3.33 5.00 6.67 8.33 50 2.00 4.00 6.00 8.00 10.00 Suppose your tax bracket is 40%, would you rather hold a 7% taxable bond or a % tax-free bond? What is the equivalent taxable yield of the 5%tax-free yield?
s Calculation (20%) Table...
Equivalent Taxable Yield • rm = r(1-t) r = rm/(1-t) Example: Suppose your tax rate is 25% on a taxable corporate bond. A municipal bond is available paying 4% interest. What interest rate would you have to receive on the corporate bond for it to be equivalent to the municipal bond?
45 Find the equivalent taxable yield of the municipal bond for tax brackets of zero, 10%, 20%, and 30%, if it offers a yield of 3.40%. (Round your answers to 2 decimal places.) Equivalent Taxable Yield % a. Zero 8 01:18:01 b. 10% % C. 20% % d. 30% %
QUESTION 6 Taxable Equivalent Yield What's the taxable equivalent yield on a municipal bond with a yield to maturity of 6.00 percent for an investor in the 35 percent marginal tax bracket? (Round your answer to 2 decimal places.) 17.14% 6.00% 9.23% 2.10%
Taxable Equivalent Yield What's the taxable equivalent yield on a municipal bond with a yield to maturity of 7.50 percent for an investor in the 15 percent marginal tax bracket? (Round your answer to 2 decimal places.)
Taxable Equivalent Yield What's the taxable equivalent yield on a municipal bond with a yield to maturity of 6.00 percent for an investor in the 28 percent marginal tax bracket? (Round your answer to 2 decimal places.)
If the municipal yield is 6%, what (pre-tax) taxable yield would a private bond issuer have to offer in order to make you indifferent between the two bonds if your tax rate is 45%? I need step by step instructions please
What's the taxable equivalent yield on a municipal bond with a yield to maturity of 5.25 percent for an investor in the 25 percent marginal tax bracket? (Round your answer to 2 decimal places.) Multiple Choice 1.31% 21.00 % 5.25% 7.00%
Find the equivalent taxable yield of the municipal bond for tax brackets of zero, 10%, 20%, and 30%, if it o s a yeld of 3.109 Round your answers to 2 decimal places. a. Zero b, 10% c.20% d, 30%
A tax-exempt municipal bond has a yield to maturity of 4.99%. An investor, who has a marginal tax rate of 30.00%, would prefer and an otherwise identical taxable corporate bond if it had a yield to maturity of more than ____%.