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1. Dana intends to invest $20,000 in either a Treasury bond or a corporate bond. The Treasury bond yields 5 percent before tax and the

1. Dana intends to invest $20,000 in either a Treasury bond or a corporate bond. The Treasury bond yields 5 percent before tax and the corporate bond yields 6 percent before tax. Danas federal marginal rate is 25 percent and her marginal state rate is 10 percent. What is the amount by which the yield on the corporate bond exceeds the yield on the Treasury bond. Assume that Dana itemizes her deductions and that any state income tax would be fully deductible.

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