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In 2022, Earl (who is single and lives in Texas) wants to invest $10,000 in a tax-exempt bond yielding 4% which matures in 15 years.
In 2022, Earl (who is single and lives in Texas) wants to invest $10,000 in a tax-exempt bond yielding 4% which matures in 15 years. He also wants to consider a corporate taxable bond. What interest rate must the corporate bond have to make its after-tax yield equivalent to the tax-exempt bond? Assume Earl is in the 32% marginal tax bracket and has 2022 AGI of $150,000.
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