Interest on municipal bonds is usually exempt from federal income taxes The interest rate on these bonds is therefore an after tax rate of return (ROR) Other types of bonds (e g , corporate bonds) pay interest that is taxable for federal income tax purposes Thus, the before tax ROR on such bonds is typically higher than the ROR on municipal bonds Develop a spreadsheet that contains the before tax ROR (on taxable bonds) that are equivalent to after tax RORs of 4 , 5 , and 6 for income tax rates of 15 , 28 , and 35 (7 6) 7 59 Interest on municipal bonds is usually exempt from federal income taxes The interest rate on these bonds is therefore an after tax rate of return (ROR) Other types of bonds (eg , corporate bonds) pay interest that is taxable for federal income tax purposes Thus, the before tax ROR on such bonds is typically higher than the ROR on municipal bonds Develop a spreadsheet that contains the before tax ROR (on taxable bonds) that are equivalent to after tax RORs of 4 , 5 , and 6 for income tax rates of 15 , 28 and 35 (7 6)

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Interest on municipal bonds is usually exempt from federal income taxes. The interest rate on these bonds is therefore an after-tax rate of return (ROR).

Interest on municipal bonds is usually exempt from federal income taxes. The interest rate on these bonds is therefore an after-tax rate of return (ROR). Other types of bonds (e.g., corporate bonds) pay interest that is taxable for federal income tax purposes. Thus, the before-tax ROR on such bonds is typically higher than the ROR on municipal bonds. Develop a spreadsheet that contains the before-tax ROR (on taxable bonds) that are equivalent to after-tax RORs of 4%, 5%, and 6% for income tax rates of 15%, 28%, and 35%. (7.6)

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7-59. Interest on municipal bonds is usually exempt from federal income taxes. The interest rate on these bonds is therefore an after-tax rate of return (ROR). Other types of bonds (eg., corporate bonds) pay interest that is taxable for federal income tax purposes. Thus, the before tax ROR on such bonds is typically higher than the ROR on municipal bonds. Develop a spreadsheet that contains the before-tax ROR (on taxable bonds) that are equivalent to after-tax RORs of 4%, 5%, and 6% for income tax rates of 15%, 28% and 35%. (7.6)