Eunice is single and in the 24% federal and 5% state tax brackets. She is considering the purchase of amunicipal bond, issued in her state of residence, with a YTM of 6.75%. What is Eunice's tax equivalent yield on the bond? O 9.51% O 4.79% 8.87% O 6.75%
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- Tammy, a resident of Virginia, is considering purchasing a North Carolina bond that yields 4.6% before tax. She is in the 35% Federal marginal tax bracket and the 5% state marginal tax bracket. She is aware that State of Virginia bonds of comparable risk are yielding 4.5%. However, the Virginia bonds are exempt from Virginia tax, but the North Carolina bond interest is taxable in Virginia. Which of the two options will provide the greater after-tax return to Tammy? Tammy can deduct any state taxes paid on her Federal income tax return. In your analysis, assume that the bond amount is 100,000.Vandell is a taxpayer in the 25 percent tax bracket. He invests in Otay Mesa Water District Bonds that pay 4.5 percent interest. What interest on a taxable bond would provide the same after-tax return to Vandell? ______%Chloe is single and in the 24% federal tax bracket and 5% state tax bracket. She is considering the purchase of a municipal bond, with a YTM of 5% Chloe's tax equivalent yield on the bond (assume that she is not subject to the 3.8% Net Investment Income Tax) is closest to: a. 6.58% b. 7.04% c. 5.26% d. 10.77%
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- Dana intends to invest $66,000 in either a Treasury bond or a corporate bond. The treasury bond yields 5 percent before tax, and the corporate bond yields 6 percent before tax. Assume Dana's federal marginal rate is 24 percent and she itemizes deductions. a-2. How much interest after-tax would Dana earn by investing in the corporate bond? b-1. If she were to move to another state where her marginal state rate would be 10 percent, which of the two options should she choose? b-2. How much interest after-tax would Dana earn by investing in the corporate bond as per requirement b-1?Hugh has the choice between investing in s City of Heflin bond at 6 percent or investment in Surething, Inc. bond at 9 percent. Assuming that both bonds have the same nontax characteristics and that Hugh has a 40 percent marginal tax rate, in which bond should he invest?Marlene, a cash basis taxpayer, invests in Series EE U.S. government savings bonds and bank certificates of deposit (CDs). Determine the tax consequences of the following on her 2019 gross income: a. On September 30, 2019, she cashed in Series EE bonds for 10,000. She purchased the bonds in 2009 for 7,090. The yield to maturity on the bonds was 3.5%. b. On July 1, 2018, she purchased a CD for 10,000. The CD matures on June 30, 2020, and will pay 10,816, thus yielding a 4% annual return. c. On July 1, 2019, she purchased a CD for 10,000. The maturity date on the CD was June 30, 2020, when Marlene would receive 10,300.
- Calculating taxes on security transactions. If Julia Diaz is single and in the 24 percent tax bracket, calculate the tax impact of each of the following security transactions. (Use the IRS regulations for capital gains in effect in 2018.) Treat each of the following cases as independent of the others. a. She sold stock for 1,200 that she purchased for 1,000 5 months earlier. b. She sold bonds for 4,000 that she purchased for 3,000 3 years earlier. c. She sold stock for 1,000 that she purchased for 1,500 15 months earlier.Dana intends to invest $60,000 in either a Treasury bond or a corporate bond. The Treasury bond yields 5 percent before tax and the corporate bond yields 6 percent before tax. Required: a-1. Assuming Dana’s federal marginal rate is 24 percent and her marginal state rate is 5 percent, which of the two options should she choose? Assume that Dana itemizes deductions. a-2. How much interest after-tax would Dana earn by investing in the corporate bond? Note: Do not round intermediate calculations and round your final answer to the nearest whole dollar amount. b-1. If she were to move to another state where her marginal state rate would be 10 percent, which of the two options should she choose? Assume that Dana itemizes deductions. b-2. How much interest after-tax would Dana earn by investing in the corporate bond as per requirement b-1? Note: Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.An investor is attempting to decide between the purchase of a tax-free municipal bond or a corporate bond. She is in the 32% tax bracket (rate). A municipal bond yields 2.2% interest and a corporate bond yields 3.1% interest. Which should she purchase? Please state the reason.