Problem:
Mr. Smith is in the 30% tax bracket. He earns $50,000 per year.
What is his tax bracket after-tax income? 50000 x 0.60 = (1-0.40 = 0.60)
50000 x 0.60 = 30000.00
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?
0.08 x $100 = $8
$8 x (1 - 40
What is the rate for Good Neighborcare bond that would give Mr. Smith the same after tax return as Megacorp bond?