Problem:
Mr. Smith is in the 30% tax bracket. He earns $50,000 per year.
What is his tax bracket after-tax income?
Mr. Smith has two investment opportunities:
a. Megacorp, a for-profit healthcare company offering a bond at 8%
b. Good Neighborcare, a not for profit healthcare compay offer a tax exempt bond at 5%.
Which investment will yielf the greatest after tax financial return?
What is the rate for Good Neighborcare bond that would give Mr. Smith the same after tax return as Megacorp bod?