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The formula for after-tax return is:
After-tax return=Before-tax return×(1−Tax rate)\text{After-tax return} = \text{Before-tax return} \times (1 - \text{Tax rate})After-tax return=Before-tax return×(1−Tax rate) =0.125×(1−0.35)=0.125×0.65=0.08125= 0.125 \times (1 - 0.35) = 0.125 \times 0.65 = 0.08125=0.125×(1−0.35)=0.125×0.65=0.08125
So, the after-tax rate of return is 0.08125.
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