If Tom Invests $60,000 in a Taxable Corporate Bond That

question 47

Multiple Choice

If Tom invests $60,000 in a taxable corporate bond that provides a 5 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) $88,647; $159,198.
• B) $92,782; $178,414.
• C) $79,621; $121,716.
• D) $77,495; $113,750.
• E) None of the choices are correct.

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