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Calculate the after-tax return of a(n) 5.29 percent, 20 -year, A-rated corporate bond for an investor in the 15 percent marginal tax bracket. Compare this
Calculate the after-tax return of a(n) 5.29 percent, 20 -year, A-rated corporate bond for an investor in the 15 percent marginal tax bracket. Compare this yield to a(n) 4.95 percent, 20 -year, A-rated, tax-exempt municipal bond, and explain which alternative is better. Repeat the calculations and comparison for an investor in the 35 percent marginal tax bracket. The after-tax return of the 5.29%,20-year, A-rated corporate bond for an investor in the 15% marginal tax bracket is %. (Round to two decimal places.) Compare this yield to the 4.95%,20-year, A-rated, tax-exempt municipal bond and explain which alternative is better. (Select the best answer below.) A. The after-tax yield of 4.50% for the corporate bond is a better alternative than the 4.95% tax-free municipal bond at the 15% tax rate. B. The 4.95% tax-free municipal bond is a better alternative than the after-tax yield of 4.50% for the corporate bond at the 15% tax rate. The after-tax return of the 5.29%,20-year, A-rated corporate bond for an investor in the 35% marginal tax bracket is %. (Round to two decimal places.) Repeat the calculations and comparison for an investor in the 35% marginal tax bracket. (Select the best answer below.) A. The 4.95% tax-free municipal bond is a better alternative than the after-tax yield of 3.44% for the corporate bond at the 35% tax rate. B. The after-tax yield of 3.44% for the corporate bond is a better alternative than the 4.95% tax-free municipal bond at the 35% tax rate
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