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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 percent.

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 percent. The second fund buys only taxable, short-term commercial paper and yields 5.2 percent. The
third fund specializes in the municipal debt from the state of New Jersey and yields 2.7 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.
Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
Answer is not complete.
b. Which of these three MMMFs offers you the highest aftertax yield?
Municipal Fund
New Jersey Fund
Taxable Fund
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