1 Other formulas that you can solve using the same Inputs

Free Cash Flow to Firm
Free Cash Flow to Firm (FCFF) =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)
More formulas
Sales Tax Amount GO
Total Sales Tax GO

What is Tax Equivalent Yield?

The 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. This calculation can be used to fairly compare the yield of a tax-free bond to that of a taxable bond to see which bond has a higher applicable yield. It is also known as the after-tax yield. The tax-equivalent yield takes into account an individual investor's current tax rate to determine whether an investment in a municipal bond is equivalent to a corresponding investment in a given taxable bond. In some cases, when an investor is certain that he will be moving up or down to a different tax bracket, this calculation can also be used to make efficient investment decisions.

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 Rate (t) and Tax Free Yield (R(tf)) 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). The tax rate is the ratio (usually expressed as a percentage) at which a business or person is taxed and 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.
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 Rate (t) and Tax Free Yield (R(tf)). With our tool, you need to enter the respective value for Tax Rate and Tax Free Yield and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
Share Image
Let Others Know
Facebook
Twitter
Reddit
LinkedIn
Email
WhatsApp
Copied!