Sunita wants to earn the highest possible after-tax return on her savings. She has two options:

a corporate bond and a tax-free government bond. The corporate bond yields 5%, and Sunita is in the 25% marginal tax bracket. What equivalent tax-free rate would a government bond need to have to make her indifferent between the corporate bond and the government bond?

a. 5.25%

b. 4.00%

c. 3.75%

d. 2.75%