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. Question content area bottom Part 1 The after-tax return of the 5.625.62%, 20-year, A-rated corporate bond for an investor in the 1515% marginal tax bracket is enter your response here%. (Round to two decimal places.) Part 2 Compare this yield to the 3.683.68%, 20-year, A-rated, tax-exempt municipal bond and explain which alternative is better. (Select the best answer below.) A. The after dash tax yield of 4.78 % for the corporate bond is a better alternative than the 3.68 % tax dash free municipal bondThe after-tax yield of 4.78% for the corporate bond is a better alternative than the 3.68% tax-free municipal bond at the 1515% tax rate. B. The 3.68 % tax dash free municipal bond is a better alternative than the after dash tax yield of 4.78 % for the corporate bondThe 3.68% tax-free municipal bond is a better alternative than the after-tax yield of 4.78% for the corporate bond at the 1515% tax rate. Part 3 The after-tax return of the 5.625.62%, 20-year, A-rated corporate bond for an investor in the 3535% marginal tax bracket is enter your response here%. (Round to two decimal places.) Part 4 Repeat the calculations and comparison for an investor in the 3535% marginal tax bracket. (Select the best answer below.) A. The after dash tax yield of 3.65 % for the corporate bond is a better alternative than the 3.68 % tax dash free municipal bondThe after-tax yield of 3.65% for the corporate bond is a better alternative than the 3.68% tax-free municipal bond at the 3535% tax rate. B. The 3.68 % tax dash free municipal bond is a better alternative than the after dash tax yield of 3.65 % for the corporate bondThe 3.68% tax-free municipal bond is a better alternative than the after-tax yield of 3.65% for the corporate bond at the 3535% tax rate.
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. Question content area bottom Part 1 The after-tax return of the 5.625.62%, 20-year, A-rated corporate bond for an investor in the 1515% marginal tax bracket is enter your response here%. (Round to two decimal places.) Part 2 Compare this yield to the 3.683.68%, 20-year, A-rated, tax-exempt municipal bond and explain which alternative is better. (Select the best answer below.) A. The after dash tax yield of 4.78 % for the corporate bond is a better alternative than the 3.68 % tax dash free municipal bondThe after-tax yield of 4.78% for the corporate bond is a better alternative than the 3.68% tax-free municipal bond at the 1515% tax rate. B. The 3.68 % tax dash free municipal bond is a better alternative than the after dash tax yield of 4.78 % for the corporate bondThe 3.68% tax-free municipal bond is a better alternative than the after-tax yield of 4.78% for the corporate bond at the 1515% tax rate. Part 3 The after-tax return of the 5.625.62%, 20-year, A-rated corporate bond for an investor in the 3535% marginal tax bracket is enter your response here%. (Round to two decimal places.) Part 4 Repeat the calculations and comparison for an investor in the 3535% marginal tax bracket. (Select the best answer below.) A. The after dash tax yield of 3.65 % for the corporate bond is a better alternative than the 3.68 % tax dash free municipal bondThe after-tax yield of 3.65% for the corporate bond is a better alternative than the 3.68% tax-free municipal bond at the 3535% tax rate. B. The 3.68 % tax dash free municipal bond is a better alternative than the after dash tax yield of 3.65 % for the corporate bondThe 3.68% tax-free municipal bond is a better alternative than the after-tax yield of 3.65% for the corporate bond at the 3535% tax rate.
Chapter4: Income Exclusions
Section: Chapter Questions
Problem 58P
Related questions
Question
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.Question content area bottom
Part 1
The after-tax return of the
5.625.62%,
20-year, A-rated corporate bond for an investor in the
1515%
marginal tax bracket is
enter your response here%.
(Round to two decimal places.)Part 2
Compare this yield to the
3.683.68%,
20-year, A-rated, tax-exempt municipal bond and explain which alternative is better. (Select the best answer below.)The after dash tax yield of 4.78 % for the corporate bond is a better alternative than the 3.68 % tax dash free municipal bondThe after-tax yield of 4.78% for the corporate bond is a better alternative than the 3.68% tax-free municipal bond
at the
1515%
tax rate.The 3.68 % tax dash free municipal bond is a better alternative than the after dash tax yield of 4.78 % for the corporate bondThe 3.68% tax-free municipal bond is a better alternative than the after-tax yield of 4.78% for the corporate bond
at the
1515%
tax rate.Part 3
The after-tax return of the
5.625.62%,
20-year, A-rated corporate bond for an investor in the
3535%
marginal tax bracket is
enter your response here%.
(Round to two decimal places.)Part 4
Repeat the calculations and comparison for an investor in the
3535%
marginal tax bracket. (Select the best answer below.) The after dash tax yield of 3.65 % for the corporate bond is a better alternative than the 3.68 % tax dash free municipal bondThe after-tax yield of 3.65% for the corporate bond is a better alternative than the 3.68% tax-free municipal bond
at the
3535%
tax rate.The 3.68 % tax dash free municipal bond is a better alternative than the after dash tax yield of 3.65 % for the corporate bondThe 3.68% tax-free municipal bond is a better alternative than the after-tax yield of 3.65% for the corporate bond
at the
3535%
tax rate.AI-Generated Solution
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