[net.invest] Tax free yield/non tax-free yield

deaner@dicomed.UUCP (Dave Deaner) (04/15/85)

For you municipal bond freaks out there the formula to figure out if a
non-taxable yield from a tax-free municipal is equivalent to a non tax-
free investment is:

Taxable yield = non-taxable yield/100 - tax rate

example:

to find out what the taxable yield on a 4.5% munie in a 40% tax bracket
divide 4.5 by 60(100-40) and you get 7.5.

Therefore to get the same kind of yield from a taxable investment the re-
turn would have to be 7.5%

Dave Deaner