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

question 88

Multiple Choice

Curtis invests $250,000 in a city of Athens bond that pays 7% interest. Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc. that pays 9% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 28%. 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 these

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