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As you know, municipal bonds (Munis) are a tax-exempt investment alternative in the case of federal taxes and in the case of most state and local...

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As you know, municipal bonds (Munis) are a tax-exempt investment alternative in the case of federal taxes and in the case of most state and local taxes. Despite a relatively low rate of return, Munis size up well when taxes are taken into consideration. Outside of your company pension plan, let's assume a relative passes away and leaved you a $50,000 inheritance. Your three alternatives are a muni that pays 6.5%, a CD that pays 4.5% and a corporate bond that pays 10%.  Assuming you are in the 28% tax bracket, calculate the after-tax return on your investment for each alternative. Project savings out for 5 years.

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3. As you know, municipal bonds (Munis) are a tax-exempt investment alternative in the case of
federal taxes and in the case of most state and local taxes. Despite a relatively low rate of return,
Munis size up well when taxes are taken into consideration. Outside of your company pension plan,
let’s assume a relative passes away and leaved you a $50,000 inheritance. Your three alternatives are a
muni that pays 6.5%, a CD that pays 4.5% and a corporate bond that pays 10%. Assuming you are in
the 28% tax bracket, calculate the after-tax return on your investment for each alternative. Project savings out for 5 years. ————

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