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Tax Equivalent Yield Solution

STEP 0: Pre-Calculation Summary
Formula Used
tax_equivalent_yield = Tax Free Yield/(1-Tax Rate)
R(te) = R(tf)/(1-t)
This formula uses 2 Variables
Variables Used
Tax Free Yield- Tax-Free Yield is the income return on an investment, such as the interest or dividends received from holding particular security without any tax imposed.
Tax Rate- The tax rate is the ratio (usually expressed as a percentage) at which a business or person is taxed.
STEP 1: Convert Input(s) to Base Unit
Tax Free Yield: 2.5 --> No Conversion Required
Tax Rate: 8 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
R(te) = R(tf)/(1-t) --> 2.5/(1-8)
Evaluating ... ...
R(te) = -0.357142857142857
STEP 3: Convert Result to Output's Unit
-0.357142857142857 --> No Conversion Required
FINAL ANSWER
-0.357142857142857 <-- Tax Equivalent Yield
(Calculation completed in 00.016 seconds)

1 Other formulas that you can solve using the same Inputs

Free Cash Flow to Firm
free_cash_flow_to_firm = Cash Flow from Operations+(Interest Expense*(1-Tax Rate))-Net Capital Expenditures Go

Tax Equivalent Yield Formula

tax_equivalent_yield = Tax Free Yield/(1-Tax Rate)
R(te) = R(tf)/(1-t)

How to Calculate Tax Equivalent Yield?

Tax Equivalent Yield calculator uses tax_equivalent_yield = Tax Free Yield/(1-Tax Rate) to calculate the Tax Equivalent Yield, Tax Equivalent Yield is the pretax yield that a taxable bond needs to possess for its yield to be equal to that of a tax-free municipal bond. Tax Equivalent Yield and is denoted by R(te) symbol.

How to calculate Tax Equivalent Yield using this online calculator? To use this online calculator for Tax Equivalent Yield, enter Tax Free Yield (R(tf)) and Tax Rate (t) and hit the calculate button. Here is how the Tax Equivalent Yield calculation can be explained with given input values -> -0.357143 = 2.5/(1-8).

FAQ

What is Tax Equivalent Yield?
Tax Equivalent Yield is the pretax yield that a taxable bond needs to possess for its yield to be equal to that of a tax-free municipal bond and is represented as R(te) = R(tf)/(1-t) or tax_equivalent_yield = Tax Free Yield/(1-Tax Rate). Tax-Free Yield is the income return on an investment, such as the interest or dividends received from holding particular security without any tax imposed and The tax rate is the ratio (usually expressed as a percentage) at which a business or person is taxed.
How to calculate Tax Equivalent Yield?
Tax Equivalent Yield is the pretax yield that a taxable bond needs to possess for its yield to be equal to that of a tax-free municipal bond is calculated using tax_equivalent_yield = Tax Free Yield/(1-Tax Rate). To calculate Tax Equivalent Yield, you need Tax Free Yield (R(tf)) and Tax Rate (t). With our tool, you need to enter the respective value for Tax Free Yield and Tax Rate and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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