Problem 4-18 Taxes and MMMFS (LO2, CFA2) Suppose you're evaluating three alternative MMMF Investments. The first fund buys a diversified portfolio of municipal securities from across the country and yields 3.3 percent. The second fund buys only taxable, short-term commercial paper and yields 5.4 percent. The third fund specializes in the municipal debt from the state of New Jersey and yields 3 percent. You are a New Jersey resident, your federal tax bracket is 35 percent, and your state tax bracket is 8 percent. (Assume your state taxes do not affect your federal taxable income.) a. Calculate the aftertax yield for each of the alternatives. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Municipal Fund Taxable Fund New Jersey Municipal Fund Aftertax Yield % % % b. Which of these three MMMFS offers you the highest aftertax yield? O New Jersey Fund O Taxable Fund Municipal Fund