Curtis Invests $250,000 in a City of Athens Bond That

question 50

Multiple Choice

Curtis invests $250,000 in a city of Athens bond that pays 7 percent interest.Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc.that pays 9 percent interest with similar risk as the city of Athens bond.Assume that Curtis's marginal tax rate is 24 percent. If Curtis invested in the Initech, Inc.bonds, what would be his after-tax rate of return from this investment?

• A)5.32 percent
• B)7.00 percent
• C)6.84 percent
• D)2.52 percent
• E)None of the choices are correct

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