If you're in the 25% marginal tax bracket,what is the equivalent taxable yield on an 10% municipal bond?

Question

Quizplus · Accepted Answer

The formula to calculate the equivalent taxable yield is: 
Municipal Bond Yield / (1 - Marginal Tax Rate)
= 10% / (1 - 0.25)
= 10% / 0.75
= 13.33% 
Therefore, the equivalent taxable yield on a 10% municipal bond for someone in the 25% marginal tax bracket is 13.33%. Option B is the correct choice.

If You're in the 25% Marginal Tax Bracket,what Is the Equivalent