000 to invest. You have narrowed your investment choices down to municipal bonds yielding 7% or equally risky corporate bonds with a yield of 10%. Which one should you choose and why? At what marginal tax rate would you be indiffe

000 Corporate interest rate 10% Municipal interest rate 7% Tax Rate 25.0% After-tax interest Corporate = Pre-tax interest – tax on interest = Muni = Pre-tax interest = There is no tax on the muni Tax rate at which you would be indifferent After-tax yield on muni versus corp bond Muni Yield = Corp Yield *(1-Tax rate) Solve for T Tax rate = 1 – (Muni yield / Corp yield) Tax Rate =