Question: Dario Flores radio station manager in Franklin County New Jersey
Dario Flores, radio station manager in Franklin County, New Jersey, is in the 25 percent federal marginal tax bracket and pays an additional 5 percent in income taxes to the state of New Jersey. Dario currently has more than $20,000 invested in corporate bonds bought at various times that are earning differing amounts of taxable interest: $10,000 in ABC earning 5.9 percent; $5000 in DEF earning 5.5 percent; $3000 in GHI earning 5.8 percent; and $2000 in JKL earning 5.4 percent. What is the after-tax return of each investment? To calculate your answers, use the after-tax yield formula (or the reversed formula) on page 129, or the Garman/Forgue companion website.
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