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Tax Equivalent Yield Formula

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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. Check FAQs

TEQY = \frac{TFY}{1 - TR}

TEQY - Tax Equivalent Yield?TFY - Tax Free Yield?TR - Tax Rate?

Tax Equivalent Yield Example

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Here is how the Tax Equivalent Yield equation looks like with Values.

Here is how the Tax Equivalent Yield equation looks like with Units.

Here is how the Tax Equivalent Yield equation looks like.

5 = \frac{2.5}{1 - 0.5}

5 = \frac{2.5}{1 - 0.5}

5 = \frac{2.5}{1 - 0.5}

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Tax Equivalent Yield Solution

Follow our step by step solution on how to calculate Tax Equivalent Yield?

FIRST Step Consider the formula

TEQY = \frac{TFY}{1 - TR}

Next Step Substitute values of Variables

∴

TEQY = \frac{2.5}{1 - 0.5}

Next Step Prepare to Evaluate

∴

TEQY = \frac{2.5}{1 - 0.5}

LAST Step Evaluate

∴

TEQY = 5

Tax Equivalent Yield Formula Elements

Variables

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.

Symbol: TEQY

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Tax Equivalent Yield

Tax Free Yield

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.

Symbol: TFY

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Tax Free Yield

Tax Rate

Tax Rate is the ratio (usually expressed as a percentage) at which a business or person is taxed.

Symbol: TR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Tax Rate

Other formulas in Tax category

Go Sales Tax Amount

STA = P \cdot (\frac{ST}{100})

Go Total Sales Tax

TST = P + STA

Go Effective Tax Rate

ETR = \frac{TEE}{EBT}

Go Taxable Income for Individual

TII = GTI - ⌈ TE ⌉ - TD

How to Evaluate Tax Equivalent Yield?

Tax Equivalent Yield evaluator uses Tax Equivalent Yield = Tax Free Yield/(1-Tax Rate) to evaluate 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 is denoted by TEQY symbol.

How to evaluate Tax Equivalent Yield using this online evaluator? To use this online evaluator for Tax Equivalent Yield, enter Tax Free Yield (TFY) & Tax Rate (TR) and hit the calculate button.

FAQs on Tax Equivalent Yield

What is the formula to find Tax Equivalent Yield?

The formula of Tax Equivalent Yield is expressed as Tax Equivalent Yield = Tax Free Yield/(1-Tax Rate). Here is an example- 5 = 2.5/(1-0.5).

How to calculate Tax Equivalent Yield?

With Tax Free Yield (TFY) & Tax Rate (TR) we can find Tax Equivalent Yield using the formula - Tax Equivalent Yield = Tax Free Yield/(1-Tax Rate).

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Tax Equivalent Yield Formula

Tax Equivalent Yield Example

Tax Equivalent Yield Solution

Tax Equivalent Yield Formula Elements

Other formulas in Tax category

How to Evaluate Tax Equivalent Yield?

FAQs on Tax Equivalent Yield

Variable Name