Problem
Calculate the after-tax return of a(n) 7.08 percent, 20-year, A-rated corporate bond for an investor in the 10 percent marginal tax bracket. Compare this yield to a(n) 5.13 percent, 20-year, A-rated, tax-exempt municipal bond, and explain which alternative is better. Repeat the calculations and comparison for an investor in the 33 percent marginal tax bracket. The after-tax return of the 7.08 %, 20-year, A-rated corporate bond for an investor in the 10 % marginal tax bracket is?