Assume that Marsha is indifferent between investing in a city of Destin bond that pays 3.85...

Assume that Marsha is indifferent between investing in a city of Destin bond that pays 3.85 percent interest and a corporate bond that pays 6.35 percent interest. What is Marsha's marginal tax rate? (Do not round intermediate computations.)

Expert Solution

Tax free yield = Taxable yield * (1 - Tax Rate)

3.85% = 6.35% * (1 - Tax Rate)

0.6063 = 1 - Tax Rate

Tax Rate = 39.34%

jeff jeffy answered 2 years ago

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