MrHayes Plans to Pay $100,000 for One of Three Investment

question 7

Multiple Choice

Mr.Hayes plans to pay $100,000 for one of three investment alternatives that have the same risk.The income from investment 1 would be taxed at Mr.Hayes' 25% regular tax rate,the income from investment 2 would be taxed at a 15% preferential rate,and the income from investment 3 is tax-exempt.The investments offer the following before-tax yields. Investment 1: 9.0%
Investment 2: 7.5%
Investment 3: 6.0%
Which investment should Mr.Hayes select?

• A)Investment 1
• B)Investment 2
• C)Investment 3
• D)Mr.Hayes is neutral between investment 2 and investment 3.

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Definitions:

Continuing-Care Community

A community that offers an environment in which all the residents are of retirement age or older and need various levels of care.

Specialized Living Environment

A tailored residential setting designed to meet the specific needs of its inhabitants, often related to health, disability, or age.

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The degree of happiness or fulfillment individuals feel within their marriage or committed relationship.

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