The Equivalent Taxable Yield under 34% of combined federal plus state tax bracket. Introduction: Normally, when an investment is made, investor gets the return through the investment and pays tax accordingly. In Equivalent taxable yield the investor invest in such a way that the return can be exempted from tax. It requires to balance the return on tax exempt investment with taxable investment. Municipal bond are calculated by equivalent taxable yield method. They are issued by the government for public welfare activities such as development of roads, air/sea ports, school etc. The return on municipal bond is tax free.

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Chapter 2, Problem 2CP

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To calculate: The Equivalent Taxable Yield under 34% of combined federal plus state tax bracket.

Introduction: Normally, when an investment is made, investor gets the return through the investment and pays tax accordingly. In Equivalent taxable yield the investor invest in such a way that the return can be exempted from tax. It requires to balance the return on tax exempt investment with taxable investment. Municipal bond are calculated by equivalent taxable yield method. They are issued by the government for public welfare activities such as development of roads, air/sea ports, school etc. The return on municipal bond is tax free.

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