What would the equivalent taxable yield be on an investment that offers a 6 percent tax exempt yield? Assume a marginal tax rate of 28 percent.
A) 0.125 percent
B) 7.20 percent
C) 6.48 percent
D) 8.33 percent
E) 32.14 percent

Question

Quizplus · Accepted Answer

The equivalent taxable yield can be calculated using the formula: Tax-Exempt Yield / (1 - Marginal Tax Rate). Plugging in the values gives us 6% / (1 - 0.28) = 6% / 0.72 = 8.33%.

What Would the Equivalent Taxable Yield Be on an Investment