Assume you are in the 25% marginal tax bracket and you have $5,000 to invest. You have narrowed your investment choices down to California bonds with a yield of 7% or equally risky ExxonMobil bonds with a yield of 10%. Which one should you choose and why? At what marginal tax rate would you be indifferent to the choice between California and ExxonMobil bond?
Donna Jamison, a graduate of The University of Tennessee with four years of banking experience, was recently brought in as assistant to the chairman of the board of Computron Industries, a manufacturer of electronic calculators. The company doubled its plant capacity, opened new sales offices outside its home territory, and launched an expensive advertising campaign. Comnputron€™s results were not satisfactory, to put it mildly. Its board of directors, which consisted of its president and vice-president plus its major stockholders (who were all local businesspeople), was most upset when directors learned how the expansion was going.

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2009 Balance Sheets Assets Accounts receivable 1.287 360 Total current assets $1,124,000 $1,946,802 Less: Accumulated depreciation Liabilities and Equity Total current liabilities $1,328,960 Common stock 100,000 shares Retained earmings Total liabilities and equity