Question 1. If an investor is in a 34 percent marginal tax bracket and can purchase a municipal bond paying 7.25 percent, what would the equivalent before-tax return from a nonmunicipal bond have to be equate the two?
Question 2. If an investor is in a 30 percent marginal tax bracket and can purchase a straight (nonmunicipal bond) at 8.37 percent and a municipal bond at 6.12 percent, which should he or she choose?