What is the tax free rate of return for an investment that has a taxable yield...

What is the tax free rate of return for an investment that has a taxable yield of 9.6% and a marginal tax bracket of 24%?

Expert Solution

The tax-free rate of return = Taxable Yield * (1 - marginal tax rate)

The tax-free rate of return = 0.096 * (1 - 0.24)

The tax-free rate of return = 0.096 * 0.76

The tax-free rate of return = 0.07296

The tax-free rate of return = 7.296%

jeff jeffy answered 2 years ago

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