How to calculate the muni bond

Assignment Help Finance Basics

Reference no: EM13274000

Suppose you were an investor and you were considering whether to buy a corporate bond from Joe's Corporation or a Municipal Bond from the city of St. Louis. Joe's corporate bond has a yield of 7%. The St Louis city bond has a yield of 5%. The income from Joe's bond is taxable. The income from the St Louis city bond is tax-free. If your effective tax rate is 30%, which bond would give you the higher after-tax yield?

I know that the corporate bond would yield 7.00%(1-.30) = 4.9%, but I would like to learn how to calculate the muni bond. Thanks!

Reference no: EM13274000

Questions Cloud

Calculate maximum power if voltage in is 9 volts : Lead resistance 3 ohms, load resistance varies from 0.3 up to 4 ohms. Calculate maximum power if voltage in is 9 volts

Determine the voltage induced in the solenoid : An ideal solenoid is constructed with 500 turns of wire of 5.00 mm radius. The wire has a cross sectional area of 3.0 x 10-8 m2, determine The voltage induced in the solenoid

Did the bad harvest increase or decrease the total revenue : Did the bad harvest increase or decrease the total revenue of U.S. wheat farmers? How could you have predicted this from your answer to part a?

Compute the mass of solid nacl : Calculate the mass of solid NaCl that must be aded to 1.50 L of a .100 M AgNO3 solution to precipitate all the AG+ ions in the form of AgCl

How to calculate the muni bond : I know that the corporate bond would yield 7.00%(1-.30) = 4.9%, but I would like to learn how to calculate the muni bond. Thanks!

How to apply a theorem or law of boolean algrebra : Each time you apply a theorem or law of boolean algrebra, mark your paper clearly to indicate which terms were used to add or delete other terms, or indicate which terms were combined. Simplify algebraically

Determine the direction of the magnetic force : In a mass spectrometer the charged particles have to reach a common specific speed. To do so, they are accelerated with an electric field, determine the direction of the magnetic force

Compute the volume in ml of a solution required to provide : Calculate the volume in mL of a solution required to provide .85 g of acetic acid (CH3COOH) from a .30 M solution

Design combinational ckt for input 4 bit and generates 3 bit : design a combinational circuit that input 4 bits and generates 3 bits and approximates the square root of a number

User Account

All Pages