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

question 3

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, Incorporated that pays 9 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent. How much implicit tax would Curtis pay on the city of Athens bond?

• A)$17,500
• B)$1,400
• C)$1,300
• D)$5,000
• E)None of the choices are correct

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