Mio X ?Mind ap . Cengage lea MindTap Cengage lea ???MindTp-Cengage Leamx x com/s

Question

Mio X ?Mind ap . Cengage lea MindTap Cengage lea ???MindTp-Cengage Leamx x com/static/nb/ui/evo/indexhtml?deploymentid-50360023745716109508025423507BeISBN-97813052806948id-3377224318snapshotld-873943 Q Search this cours 7-8-9) 23 (Chapters 7-8-9) Assignment g 0:52:26 Save Submit Test f d Questi Julie is in the 28 percent tax bracket. She eams an 8 percent rate of retum after taxes on a tax free municipal bond. What will the after-tax rate of return be on a taxable bond (with equal risk)? a. 36 percent b. 8 percent c 28 percent d.14 percent Icon Key Queetion 20 of 20 Save Subnit Test for Grading O Type here to search

Explanation / Answer

8% = Before tax return * (1 - 28%)

Before tax return = 11.11%

After tax return on taxable bond = 11.11% (1-28%) = 8%

Hewnce, the answer is 8%, the second option.

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