( 2. Suppose your tax bracket is 28%. Would you prefer to earn a 6% taxable...
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...
with a 28% marginal tax rate, would a tax- free yield of 5.4% or a taxable yeild of 8.5% give you a better return on your savings?
You are an investor in the 34% marginal tax bracket. You are looking to invest some of your funds in a fixed income security. You see a Mecklenburg County municipal bond with a yield of 2.75%. The other bond you are considering is a Ford Motor Company corporate bond yielding 4.00%. On the basis of taxable equivalent yield, which bond would you choose? Answers: A. The municipal bond because its after-tax yield is higher B. The municipal bond because its...
Assume you are in the 35 percent tax bracket and purchase a municipal bond with a yield of 6.00 percent. Use the formula presented in chapter 11 of your textbook to calculate the taxable equivalent yield for this investment. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Taxable equivalent yield I
You are an investor in the 37% marginal tax bracket. You are looking to invest some of your funds in a fixed income security. You see a Mecklenburg County municipal bond with a yield of 2.75%. The other bond you are considering is a corporate bond of equivalent credit yielding 4.50%. On the basis of taxable equivalent yield, which bond would you choose?
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.)
You are considering an MMMF. The fund is taxable and pays 8.5% interest. If your top federal tax bracket is 25% and you live in a state that doesn't impose income taxes, what after-tax return would you realize from this investment? Select one: a. 2.13% b. 7.44% c. 6.38% d. 8.25% O You are considering an MMMF. The fund is taxable and pays 8.5% interest. If your top federal tax bracket is 25% and you live in a state that...
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?
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%
Assume you are in the 33 percent tax bracket and purchase a municipal bond with a yield of 6.25 percent. Use the formula presented in chapter 11 of your textbook to calculate the taxable equivalent yield for this investment. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)