What is the after-tax return on municipal bonds

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Reference no: EM13721640

Municipal bonds are currently offering investors a 6% return and corporate bonds with the same maturity and default risk are offering investors an 8% return.

a) What is the after-tax return on municipal bonds for an investor in the 30% tax bracket?

b) What is the after-tax return on corporate bonds for an investor in the 30% tax bracket?

c) At what personal tax rate would an investor be indifferent between corporate bonds and municipal bonds?

Reference no: EM13721640

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