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5. Before- and after-tax returns Consider a bond with a before-tax coupon rate of 7%. Complete the following table by calculating the after-tax rate of
5. Before- and after-tax returns
Consider a bond with a before-tax coupon rate of 7%.
Complete the following table by calculating the after-tax rate of return for three different marginal tax rates. (Note: Round your answers to the nearest hundredth.)
Marginal Tax Rate | After-Tax Rate of Return |
---|---|
27% | |
28% | |
29% |
True or False: The after-tax rate of return increases with the marginal tax rate.
True
False
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