16-1 7. Mrs. Yue, a resident of Virginia, paid $50,000 for a bond issued by Pennsylvania...

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16-1 7. Mrs. Yue, a resident of Virginia, paid $50,000 for a bond issued by Pennsylvania that paid $3,400 interest this year. Her marginal state income tax rate is 6 percent. Under Virginia law, interest on debt obligations issued by another state is taxable. Mrs. Yue can deduct her state income tax on her Form 1040, and her marginal federal income tax rate is 24 percent. Compute her after-tax rate of return on the bond. 16-1 7. Mrs. Yue, a resident of Virginia, paid $50,000 for a bond issued by Pennsylvania that paid $3,400 interest this year. Her marginal state income tax rate is 6 percent. Under Virginia law, interest on debt obligations issued by another state is taxable. Mrs. Yue can deduct her state income tax on her Form 1040, and her marginal federal income tax rate is 24 percent. Compute her after-tax rate of return on the bond.