Question

What would the after-tax yield be on an investment that offers a 6 percent fully taxable yield? Assume a marginal tax rate of 31%.

a. 2.79%
b. 6.48%
c. 4.1490
d. 7.20%
e. 12.50%

Answer 1

the after tax yield is 4.14%

Step-by-step explanation:

The computation of the after -tax yield is shown below

After tax yield = before tax yield × ( 1 - tax rate )

= 6% × ( 1 - 0.31 )

= 6% × 0.69

= 4.14%

Hence, the after tax yield is 4.14%

Therefore the correct option is c.

We simply applied the above formula so that the correct value could come

And, the same is to be considered