Your after-tax yield on this bond is 7.125 or 7.13%
What is after-tax yield?
The after-tax rates of return, that also takes into account the taxes that will need to be paid on the investment, is crucial to consider when individuals and businesses calculate one‘s return on an investment. The effective end yield is the amount that is still present after taxes have been deducted. For instance, the after-tax dividend yield is only $800 if a person receives $1,000 in dividends from an investment but must pay 20% in taxes. In addition to providing a more accurate picture of an investment's profitability, determining the effective after-tax yield also enables investors to more thoroughly consider the tax ramifications of withdrawing definite investments.
After Tax Yield = pretax Yield * (1-Marginal Rate)
= 9.5*(1-.25)
= 9.5*.75
= 7.125 or 7.13
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