If Tom Invests $40,000 in a Taxable Corporate Bond That

question 112

Multiple Choice

If Tom invests $40,000 in a taxable corporate bond that provides a 8 percent before-tax return, how much will Tom's investment be worth in either 8 or 20 years from now when the bond matures? Assume Tom's marginal tax rate is 35 percent.

• A)$74,037; $186,438
• B)$75,292; $174,913
• C)$62,131; $118,215
• D)$60,005; $110,249
• E)None of the choices are correct.

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