What is the formula for determining taxable equivalent yield on municipal bonds based on Fed. income tax rate? - taxable equivalent yield formula
make tax-free income and dividing by 1 minus the tax level.
For example, income tax of 5% (coupon)
Your tax bracket 35%
to know the tax equivalent yield loss
5 / 65 (1-.35) = 7.69%
The tax rate for the return of this bond is 7.69% in support of 35% VAT.
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