You have a marginal tax rate of 24% and an average tax rate of 19%. Municipal bonds in your area are yielding 3.90%. What is your equivalent taxable yield?

Name: You have a marginal tax rate of 24% and an average tax rate of 19%. Municipal bonds in your area are yielding 3.90%. What is your equivalent taxable yield?
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Question

Quizplus · Accepted Answer

To find the equivalent taxable yield, divide the municipal bond yield by (1 - marginal tax rate). So, the calculation is 3.90% / (1 - 0.24) = 3.90% / 0.76 = 5.13%.

You Have a Marginal Tax Rate of 24% and an Average