smeredith
Aug 2, 2009, 01:24 AM
How do I calculate the after-tax yields on foregoing investments, if I have a 28% marginal tax rate ?
ArcSine
Aug 2, 2009, 05:28 AM
Generally, the after-tax yield is P x (1 - T), where P is the pre-tax yield, and T is your marginal tax rate.
That little formula ought to get the job done for you.
Note that the formula works just as well for non-taxed instruments, such as munis, as long as you remember that in such case, T = 0. Then the formula reduces to
After-tax yield = P x (1 - 0) = P.