After-Tax Calculations; After-Tax Yield - Monroe 3180 User Manual

Monroe 3180: user guide

Hide thumbs Also See for 3180:

Specifications (1 page)

Table Of Contents

Table of Contents

The TRADER II has the capability of calculating several after-tax functions.

These calculations are always based on either or both of two different tax rates, the income tax and

capital gains rates. The TRADER II can be used to compute after-tax calculations for notes as well as

bonds.

After-tax yield calculations cannot be done for Treasury Bills.

Calculations.)

Before after-tax calculations can be performed, store the appropriate tax rates. The tax rates, like the

coupon rate, are entered as percentages, each rate is a two digit number separated by a decimal point,

and press TAX RATE.

Once entered, there is no need to re-enter the tax rate, unless the rate changes. To see the rates

previously stored, press DISPLAY, TAX RATE.

After-tax calculations can be done for all securities, by the selection of the appropriate Security Code. In

most cases, Municipal Bonds do not require an income tax rate. Just enter zero for the income tax rate.

Premium bonds and notes, in accordance with convention, are calculated using the tax rate for both the

tax on interest and the tax on the capital loss.

AFTER-TAX YIELD

To determine the after-tax yield of a security, begin by performing a normal TO PRICE or TO YIELD

calculation.

When the proper tax rates are stored, press AFTER-TAX. (No entry is required, since all

information needed for the calculation is already stored.) The after-tax yield is displayed.

EXAMPLE:

A Corporate Bond with a 7% coupon is offered at a price of 92.625. If matures on

January 5, 1992. What is the after-tax yield to a purchaser whose tax rate is 33% and capital gains is

28%? The settlement date is June 24, 1987.

ENTER

6.2487