Q&A Hero

Question

A 7-year municipal bond yields 4.80%. Your marginal tax rate (including state and federal taxes) is 32.00%. What interest rate on a 7-year corporate bond of equal risk would provide you with the same after-tax return? (Round your final answer to two decimal places.)

a. 8.68%

b. 8.19%

c. 6.00%

d. 6.28%

e. 7.06%