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QUESTION

A taxable bond has a yield of 9%, and a municipal bond has a yield of 5%. a. If you are in a 40% tax bracket, which bond do you prefer?

A taxable bond has a yield of 9%, and a municipal bond has a yield of 5%.

a. If you are in a 40% tax bracket, which bond do you prefer?

b. At what tax rate would you be indifferent between the two bonds?

what is the step by step solution to this equation?

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