Answer:
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%
