Assuming a 33% (1/3) tax rate, what would be the nominal return after taxes when the...

Assuming a 33% (1/3) tax rate, what would be the nominal return after taxes when the nominal interest rate is 12%?

Nominal Interest Rate	Nominal Return After Taxes
3%
6%
12%
18%

Group of answer choices

15%

12%

Solutions

Expert Solution

The formula for nominal rate after tax = Nominal rate * (1-tax rate)

= 0.12*(1-0.3333)

=0. 080004

Approximately 8% .

Thus d is the correct answer.

Rahul Sunny answered 1 year ago

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