Your best taxable investment opportunity has an EAR of 4.3%. Your best tax-free investment opportunity has an EAR of 2.5%. If your tax rate is 25%, which opportunity provides the higher after-tax interest rate?

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Your best taxable investment opportunity has an EAR of 4.3%. Your best tax-free investment opportunity has an EAR of 2.5%. If your tax rate is 25%, which opportunity provides the higher after-tax interest rate?

Your best taxable investment opportunity has an EAR of . Your best tax-free investment opportunity has an EAR of . If your tax rate is , which opportunity provides the higher after-tax interest rate?

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answered by: Andrew San Andres

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Your best taxable investment opportunity has an EAR of 4.3%. Your best tax-free investment opportunity has an EAR of 2.5%. If your tax rate is 25%, which opportunity provides the higher after-tax interest rate?