Assume that in both cases, Bill earns the same returns as calculated on both the corporate and municipal bonds each year for the next 15 years. What is the after-tax return on Bill’s corporate bonds for the current year?

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The after-tax return on Bill’s corporate bonds for the current year would be calculated by subtracting the applicable income tax rate from the returns earned on the corporate bond. For example, if Bill earns a 5% return on his corporate bond and his applicable income tax rate is 25%, then his after-tax return would be 3.75%.