You put money into an account that earns a 8 percent nominal interest rate. The inflation rate is 3 percent, and your marginal tax rate is 25 percent. What is your after-tax real rate of interest?

Question

Quizplus · Accepted Answer

The after-tax real rate of interest is the nominal interest rate minus the inflation rate and the marginal tax rate. In this case, the after-tax real rate of interest is 8% - 3% - 25% * (8% - 3%) = 3%.

You Put Money into an Account That Earns a 8