Will Invests $20,000 of After-Tax Dollars (AT$)in Tax-Exempt Municipal Bonds

question 39

Multiple Choice

Will invests $20,000 of after-tax dollars (AT$) in tax-exempt municipal bonds which yield 5% per year.He reinvests the interest in the same bonds and holds the bonds for two years.Will's marginal tax rate is 25%.What is his after-tax accumulation at the end of two years?

• A)$21,000
• B)$21,528
• C)$22,000
• D)$22,050

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