absolutjosh
New member
- Joined
- Sep 6, 2007
- Messages
- 5
An investor had a choice of two investments: a bond fund and a stock fund. The bond fund yeilds 7.186% interest annually, which is nontaxable at both the federal and state levels. Suppose the investor pays federal income tax at a rate of 28% and state income tex at a rate of 7%. Determine what the annual yield must be on the taxable stock fund so that the two funds pay the same amount of net interest income to the investor.