In Order for You to Be Indifferent Between the After-Tax

question 61

Multiple Choice

In order for you to be indifferent between the after-tax returns on a corporate bond paying 8.5% and a tax-exempt municipal bond paying 6.12%, what would your tax bracket need to be

• A)33%
• B)72%
• C)15%
• D)28%
• E)Cannot tell from the information given

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Definitions:

Net Income

The conclusive profit of a business, determined by subtracting expenses, taxes, and costs from its overall revenue.

Excess of Cost

Excess of cost refers to the situation where the purchase price of an acquired company exceeds the sum of the fair value of its identifiable tangible and intangible assets.

Book Value

The company's assets' total worth after subtracting its debts, frequently utilized to determine whether a stock is priced too low or too high.

Fair Value

The financial receipts from a sale of an asset or the liabilities' transfer expense in a transaction that is orderly and involves market participants at the time allocated for measurement.