What’s the taxable equivalent yield on a municipal bond with a yield to maturity of 4.1 percent for an investor in the 28 percent marginal tax bracket?
Q: Corporate bonds issued by Johnson Corporation currently yield 8%. Municipal bonds of equal risk…
A: Current yield on Corporate bonds = 8% Current yield on Municipal bonds = 6% Formula: Corporate Bond…
Q: An investor recently purchased a corporate bond that yields 9%. The investor is in the 36% combined…
A: Before tax yield = 9.00% Tax rate = 36% After Tax yield = Before tax yield * (1- Tax rate)
Q: Municipal bonds are yielding 4.4 percent if they are insured and 4.7 percent if they are uninsured.…
A: Bonds are the debt security which is offered or issued by the corporates or the governments to…
Q: Suppose the state of Indiana issued a tax-exempt bond to pay for student fees in its universities.…
A: The tax-equivalent yield, also known as the After-tax yield, is used to establish if an investment…
Q: Find the equivalent taxable yield of a short-term municipal bond currently offering yields of 4% for…
A: With the given information, we can calculate the equivalent taxable yield using the steps below:
Q: An investor recently purchased a corporate bond that yields 10%. The investor is in the 38% combined…
A: In the above question we need to calculate the bond's after tax yield from the details given.
Q: Short-term municipal bonds currently offer yields of 4%, while comparable taxable bonds pay 5%.…
A: With the given information, we can compare the yields as follows:
Q: A municipal bond you are considering as an investment currently pays a yield of 6.76 percent. a.…
A: The tax-equivalent yield is the rate of return that a taxable bond must achieve in order to match…
Q: A bond issued by the New York state is priced to yield 6.30 % . If you are in the 25 % tax bracket…
A: Bonds are a kind of debt financial instrument which is a fixed-income investment vehicle that…
Q: Frosty Corporation pays 11.6% interest on its outstanding bonds. If its tax rate is 40%, what is…
A: When the corporation pays the interest on bonds, they are eligible to deduct this as an expense in…
Q: b) You can invest in taxable bonds that are paying a yield of 9.50% or a municipal bond paying a…
A: A security bond is a legally enforceable promise to pay the government if you or your employee…
Q: A municipal bond carries a coupon of 6.75% and is trading at par. What is the equivalent taxable…
A: The formula to compute equivalent taxable yield is as follows:
Q: Kelly Phillips, an investor who resides in Livingston NJ, has a marginal tax rate of 28%. If a NJ…
A: Yield to maturity = 5.53% Marginal Tax = 28%
Q: Suppose an investor is considering a corporate bond with a 7.17% before-tax yield and a municipal…
A: For indifference, both bond should be equal after tax
Q: What is the yield to maturity on Fox Inc.'s bonds if its after-tax cost of debt is 9% and its tax…
A: After Tax Cost of Debt is calculated as Yield to maturity minus tax shield.
Q: Amar Corporation pays 11.6% interest on its outstanding bonds. If its tax rate is 40%, what is its…
A: Solution:- When a company issue bonds to raise funds, it pays interest on it. This interest is…
Q: If the municipal bond rate is 6% and the corporate bond rate is 8%, what is the marginal tax rate,…
A: The taxable equivalent yield is 8% in this scenario whereas tax free yield is 6%. We need to find…
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A: Bonds are the liabilities of the company which is issued to raise the funds required to finance the…
Q: a. What is the firm's after-tax cost of debt on the bond? % (Round to two decimal places.)
A: In this we need to calculate the yield to maturity of bond and than calculate after tax of bond.
Q: Assume a municipal bond has a yield of 5.75% and corporate bond of comparable maturity and credit…
A: After tax yield on any investment is the total rate of return that is generated after accounting for…
Q: An investor is in the 28% tax bracket. A corporate bond has a before-tax yield of 8%. What is the…
A: Given details are : Before tax yield = 8% Tax rate = 28% = 0.28 We need to compute the equivalent…
Q: The after-tax cost of debt using the bond's yield to maturity (YTM) is %. (Round to two decimal…
A: Cost of Debt: It represents the cost of raising debt capital from the debt holders. The debt…
Q: You can invest in taxable bonds that are paying a yield of 9.7 percent or a municipal bond paying a…
A: A financial instrument that does not affect the ownership of the common shareholders or management…
Q: Assume that an individual owns a bond that they purchased for $100,000. The bond has a 10% coupon.…
A: Bonds- A bond is a fixed-income tool that represents a loan made by a shareholder to a borrower…
Q: Assume a municipal bond has a yield of 5.75% and corporate bond of comparable maturity and credit…
A: After tax Yield on Municipal Bond = Before Tax Yield on Municipal Bond After tax Yield on Municipal…
Q: A bond issued by the Irbid Municipal is priced to yield 7.80%. If you are in the 15% tax bracket his…
A: Tax Equivalent Yield = Tax free municipal yield / (1 -tax rate)
Q: The coupon rate on a tax-exempt bond is 5.6%, and the rate on a taxable bond is 8%. Both bonds sell…
A: Tax-exempt bond is 5.6%. By using the formula of Equivalent taxable yield, The formula of…
Q: What is the taxable equivalent yield on a municipal bond with a yield to maturity of 4 percent for…
A: In this question we need to compute the taxable equivalent yield on a municipal bond.
Q: The current yield on a municipal bons is 6%. What would the equivalent taxable yield of this bond…
A: Yield on municipal bond is tax free. But yield on corporate bond is taxable. Given: Yield on…
Q: A state issued muni bond offered at a coupon rate of 4% is preferred over a junk bond of 6% when a…
A: Municipal securities, sometimes known as "muni bond," are bonds issued by states, cities, counties,…
Q: A municipal bond has a yield to maturity of 3.8 percent. What corporate bond yield would make an…
A: Yield on Municipal Bond should be equal to corporate bond yield * (1-tax rate), for indifference…
Q: You purchase a tax-free municipal bond paying an annual rate of 6 percent. Find the before-tax rate…
A: Before tax rate = annual rate / (1-tax rate)
Q: Outstanding debt of Home Depot trades with a yield to maturity of 8%. The tax rate of Home Depot is…
A: Cost of debt: The minimum rate of return that a debt holder expects to earn from the debt…
Q: If you were to purchase a bond for $1,100 that paid $50 per year in dividends, what will be the…
A: Current yield tells the annual return that an investor would get if the asset is held for a year. To…
Q: Assume you are in the 35 percent tax bracket and purchase a 3.60 percent municipal bond. Use the…
A: Formulas: Taxable equivalent yield = Municipal bond interest rate / (1- Tax rate)
Q: A Corporation believe that it can sell long term-bonds with an 8% coupon rate, although the…
A: Coupon rate = 8% Effective rate = 10% Tax rate = 35%
Q: 1. A bond issued by the Irbid Municipal is priced to yield 7.80%. If you are in the 15% tax bracket…
A: Given, Tax rate = 15% Yield = 7.8%
What’s the taxable equivalent yield on a municipal bond with a yield to maturity of 4.1 percent for an investor in the 28 percent marginal tax bracket?
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- What is the taxable equivalent yield on a municipal bond with a yield to maturity of 4 percent for an investor in the 28 percent tax bracket?Suppose you invest in a municipal bond that pays a yield of 9%. If your marginal tax is 29%, what is the equivalent yield on the taxable bond? (write your answer in percentage and round it to 2 decimal places)Assume your in the 28% tax bracket and purchase a municipal bond with yield of 3.10%. What is the taxable equivalent yield for this investment?
- Suppose 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)The 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 placesAssume 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?
- Taxable Equivalent Yield What's the taxable equivalent yield on a municipal bond with a yield to maturity of 10.00 percent for an investor in the 35 percent marginal tax bracket?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?Calculate the after-tax return of a(n) 5.625.62 percent, 20-year, A-rated corporate bond for an investor in the 1515 percent marginal tax bracket. Compare this yield to a(n) 3.683.68 percent, 20-year, A-rated, tax-exempt municipal bond, and explain which alternative is better. Repeat the calculations and comparison for an investor in the 3535 percent marginal tax bracket.
- A municipal bond you are considering as an investment currently pays a yield of 6.76 percent. a. Calculate the tax equivalent yield if your marginal tax rate is 28 percent.b. Calculate the tax equivalent yield if your marginal tax rate is 21 percent.Suppose your marginal federal income tax rate is 25 percent. 1. What is your after-tax return from holding a one-year corporate bond with a yield of 5.25 percent? (1 pt) 2. What is your after-tax return from a holding a one-year municipal bond with a yield of 4 percent? (1 pt) 3. How would you decide which bond to hold? (Assume that Both bonds carry the same risk.) (1 pt)C) Suppose that the interest rate on a taxable corporate bond is 9% and that the marginal tax is 28%. Suppose a tax-free municipal bond with a rate of 6.75% was available. Which security would you choose?