Who are the taxes being paid to

Assignment Help Management Theories

Reference no: EM131457093

Question: Taxpayer A purchased $100,000 of corporate bonds yielding 12.5% per annum; the interest income from these bonds is taxed at a rate of 28%. Taxpayer B purchased $100,000 of municipal bonds yielding 9% per annum. The interest from these bonds is tax exempt. The bonds have similar maturities and risk. What is the after-tax rate of return earned by each taxpayer? Is taxpayer B paying taxes in any sense here?

a. Who are the taxes being paid to?

b. What is the implied tax rate?

Reference no: EM131457093

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