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).