## Apologies for the repetition. To clarify, the after-tax yield on municipal bonds is equal to the expected annual yield, which is 5%. This is because municipal bond interest is usually exempt from federal income tax. Therefore, the full yield is realized by the investor.

For high-growth common stocks with an expected annual increase in market value of 10% and no expected dividend yield (0%), the after-tax yield can be calculated based on long-term capital gains tax rates.

The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced the long-term capital gains tax rate to 15% for individuals in the 28% marginal tax bracket. To calculate the after-tax yield, subtract the tax rate (15%) from 100% (1), which equals 85% (0.85).

Therefore, the after-tax yield on the high-growth common stocks would be 10% multiplied by (1 - 0.85) = 8.5%. This means that after accounting for taxes, the investor can expect an 8.5% return on the high-growth common stocks.