Calculate the after-tax rate of return on the taxable bond, Financial Management

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Calculate the after-tax rate of return on the taxable bond

You can invest in taxable bonds that are paying a yield of 9.5 percent or a municipal bond paying a yield of 7.75 percent. Assume your marginal tax rate is 28 percent.

a. Calculate the after-tax rate of return on the taxable bond?

b. Which security bond should you buy?

- Taxable bonds that are paying a 9.5 percent annual rate of return OR

- Municipal bond paying a 7.75 percent annual rate of return.

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Financial Management: Calculate the after-tax rate of return on the taxable bond

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Financial Management: Calculate the after-tax rate of return on the taxable bond

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