What would be your highest marginal tax rate for you to prefer a corporate bond paying...

What would be your highest marginal tax rate for you to prefer a corporate bond paying 7.81% to a tax-exempt municipal bond paying 5%? Round your answer to 4 decimal places. For example, if your answer is 3.205%, then please write down 0.0321.

Solutions

Expert Solution

Corporate bond yield*(1 - Tax rate) = Municipal bond yield

7.81%*(1 - Tax rate) = 5%

(1 - Tax rate) = (5% / 7.81%)

Tax rate = 0.3598

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

What would be your highest marginal tax rate for you to prefer a corporate bond paying...

What would be your highest marginal tax rate for you to prefer a corporate bond paying 7.62% to a tax-exempt municipal bond paying 5%

tax A paying investor would generally prefer a high dividend paying stock or a low dividend...

tax A paying investor would generally prefer a high dividend paying stock or a low dividend paying stock, all else the same (i.e. all else the same implies the low dividend stock reinvests the dividend that the high paying firm pays and thus creates capital gains)?

Sole proprietorship for 2019 what is the highest marginal income tax rate that an individual can...

Sole proprietorship for 2019 what is the highest marginal income tax rate that an individual can pay?

Optimal tax theory prescribes a zero marginal tax rate applied to the highest earner in society....

Optimal tax theory prescribes a zero marginal tax rate applied to the highest earner in society. Using an indifference curve diagram, explain the logic for this. Why is a zero marginal tax rate for the highest earner not applied in practice?

Paying Taxes (8 pts) The marginal tax bracket in a society is listed below. Marginal Rate...

Paying Taxes (8 pts) The marginal tax bracket in a society is listed below. Marginal Rate Range Individual Range Married 10% $0-$20,000 $0-$30,000 15% $20,00-$50,000 $30,000-$80,000 20% $50,00-$90,000 $80,000-$250,000 25% $90,00-$200,000 $250,000-$500,000 30% $200,000 + $500,000+ Sam has an income of $50,000. Joe, Sam’s spouse, has an income of $75,000. Daphne has an income of $150,000. Fred, Daphne’s spouse, has an income of $30,000. Married individuals have the option to either file as a married couple or as individuals. If...

Corporate Tax Rate Schedule Taxable income brackets Tax calculation Base tax + (Marginal rate × amount...

Corporate Tax Rate Schedule Taxable income brackets Tax calculation Base tax + (Marginal rate × amount over bracket lower limit) $ 0 to $ 9,525 $ 0 + (10% × amount over $ 0) 9,525 to 38,700 $ 953 + (12% × amount over $ 9,525) 38,700 to 82,500 $ 4,454 + (22% × amount over $ 38,700) 82,500 to 157,500 $ 14,090 + (24% × amount over $ 82,500) 157,500 to 200,000 $ 32,090 + (32% × amount over...

Coupon rate for a $1000 corporate bond is 9%. This bond is paying coupon semi-annually and...

Coupon rate for a $1000 corporate bond is 9%. This bond is paying coupon semi-annually and will mature in 9 years. If the current market yield for this bond is 8%, what would be the value of this bond?

What is Amazon's Marginal Tax Rate?

A) What is the difference between the marginal tax rate and the average tax rate? What...

A) What is the difference between the marginal tax rate and the average tax rate? What is the difference between the statutory tax rate and the effective tax rate? Explain. B) Compare and contrast tax deductions and tax credits in terms of both efficiency and vertical equity. C)Is it possible for the government to impose a tax that causes the market price of the good to fall? Explain.

a corporation with a marginal tax rate 34 percent would receive what after tax dividend yeild...

a corporation with a marginal tax rate 34 percent would receive what after tax dividend yeild on a 12 percent coupon rate preferred stock bought at par asuming a 70 percent dividend exclusion

Subjects