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Business, 19.02.2020 21:47 mjmckay03

Tammy, a resident of Virginia, is considering whether to purchase a $100,000 North Carolina bond that yields 4.6% before tax. She is in the 35% Federal marginal tax bracket and the 5% state marginal tax bracket. Tammy is aware that State of Virginia bonds of comparable risk are yielding 4.5%. Virginia bonds are exempt from Virginia tax, but the North Carolina bond interest is taxable in Virginia. Tammy can deduct all state taxes paid on her Federal income tax return

Determine the AFTER TAX INCOME FROM EACH BOND:

Virginia bond:

North Carolina Bond:

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