A 6% taxable return is equivalent to an after-tax return of 6(1 .28) 4.32%. Therefore, you would be better off in the taxable bond. The equivalent taxable yield of the tax-free bond is 4/(1 .28) 5.55%. So a taxable bond would have to pay a 5.55% yield to provide the same after-tax return as a tax-free bond offering a 4% yield. LO.1