Answer:
14.29% or higher
Explanation:
Municipal bonds interest rates are tax free. Corporate bond rates however are have tac benefits through tax shield.
The formula for aftertax corporate bond rate = pretax rate(1-tax)
pretax rate = 7% or 0.07 as a decimal
aftertax rate(to be indifferent between the two) = 6% or 0.6
In order to be indifferent, the tax rate would be;
0.07 ( 1- tax ) = 0.06
0.07 - 0.07tax = 0.06
0.07 - 0.06 = 0.07tax
0.01 / 0.07 = tax
tax = 0.1429 or 14.29%
Therefore, Investors with a tax rate of 14.29% or higher would prefer the municipal bond.
As either? did you finish it?
Importing
What is Importing?
An import is an item or service that is purchased outside of its nation of origin. International trade is made up of imports and exports. A country has a negative trade balance, or a trade deficit, if the value of its imports exceeds the value of its exports. Since 1975, the US has had a trade imbalance. The U.S. Census Bureau estimates that in 2019, the deficit was $576.86 billion.
To learn more about Importing
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