After-Tax yield?

Q (a): An investor recently purchased a corporate bond which yields 9%. The investor is
in the 36% combined federal and state tax bracket. What is the bond's after-tax yield?

(b): Corporate bonds issued by corporation currently yield 8%. Municipal bond of equal
risk currently yields 6%, At what tax rate would an investor be indifferent between these
two bonds?

Thanks in advance.

a- 9%(1 ' 0.36) = 5.76% or 5.8%

b- Corpo Bond Yield=(Municipal Yield)/(1- Taxation rate)
get an answer of .25 or 25%

Questions from Financial Management theory & practice by Eugene F. Brigham

Michael C. Ehrhardt