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An in-state municipal bond has a yield of 5%. If state taxes are 10%, and federal taxes are 25%, which of the following is closest

An in-state municipal bond has a yield of 5%. If state taxes are 10%, and federal taxes are 25%, which of the following is closest to the taxable equivalent rate for this bond?

a. 3.4%

b. 5.4%

c. 7.4%

Please show work ( not excel ) and explain. Thank you.

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