1. US municipal bonds are exempt from federal income tax, and you are in 35% fed
ID: 1131114 • Letter: 1
Question
1.US municipal bonds are exempt from federal income tax, and you are in 35% federal income tax bracket. If you have two alternatives to invest in Treasury bonds with interest rate of 50% and municipal bonds with interest rate of 2.75%. If there is no difference on earns on two bonds, what should interest rate on Treasury bonds be?why?
why the answer is :4.231% before taxes. ?
2.US municipal bonds are exempt from federal income tax, and you are in 39% federal income tax bracket. If you have two alternatives to invest in Treasury bonds with interest rate of 50% and municipal bonds with interest rate of 2.75%. Which is correct?
why the answer is: you earn 2.135% after taxes interest rates on Treasury bonds.?
3.US municipal bonds are exempt from federal income tax, and you are in 39% federal income tax bracket. If you have two alternatives to invest in Treasury bonds with interest rate of 50% and municipal bonds with interest rate of 2.75%. If there is no difference on earns on two bonds, what should interest rate on Treasury bonds be?
why the answer is: 1.6775% before taxes.?
Explanation / Answer
I think there is some problem in questions. Interest on bonds can't be 50%.That is not normally found. Please upload question again with right information
If it is 3950% then answer is 4.231% because 35% of 4.231=1.48085 . now 4.231-1.48085=2.751015. Which is equal to 2.75%
2 please submit correct info for 2nd question so that I can answer it
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