00:01
So here we have some stories about tax advantage investing, right? the idea here is that most municipal bonds in the united states are tax -free, right? so in order to encourage you to invest and support your local municipalities financially, you get a break on taxes, right? so here we get tax -free in a, we get 7%.
00:28
So if taxable in comparison, and we earn, say, x percent, we get one plus plus x.
00:43
Now, we don't get x because we have to pay some taxes in it, right? we get one minus x and we pay xt in taxes.
00:55
If t is our tax rate, right? so if you make, say, 10 % and t is a half, you would pay 50 % to the tax man and you would keep the other 50 % for yourself, right? so if t is equal to zero, there are no taxes.
01:11
If t is equal to 100%, it's all going to taxes, right? so what i want to do here is set x outside of 1 minus t equals to 7%.
01:23
Now we know here in a that the taxpayer is paying 28%.
01:28
So t is equal to 0 .1.
01:30
28, right? so i could get x1 minus 0 .28 is equal to 0 .07.
01:38
This gives me x is equal to 0 .07 over 0 .72.
01:45
So now i run off to the calculator and i plug that in...