An income trust has a return of 6.2 percent and it is able to redistribute the income to the unit-holders. If you are in the 32 percent tax rate, what is the equivalent after tax yield?

Question

Quizplus · Accepted Answer

To find the after-tax yield, we need to subtract the tax rate from 100% and then multiply it with the return.

After-tax yield = (1 - tax rate) x return
= (1 - 0.32) x 0.062
= 0.0422 or 4.22%

Therefore, the best choice is C.

An Income Trust Has a Return of 6