Problem $7-31$ Comparing Bond Yields $($LG$7-6)$

A client in the $34$ percent marginal tax bracket is comparing a municipal bond that offers a $6\mathrm{.}40$ percent yield to maturity and a similarrisk corporate bond that offers a $7\mathrm{.}40$ percent yield.

Determine the equivalent taxable yield. $($Round your answer to $2$ decimal places.$)$

Equivalent taxable yield

$\%$

Which bond will give the client more profit after taxes?

corporate bond

municipal bond