1.) Melinda invests $300,000 in a City of Heflin bond that pays 6.4 percent interest. Alternatively, Melinda could have invested the $300,000 in a bond recently issued by Surething, Inc. that pays 8 percent interest with similar risk and other nontax characteristics to the City of Heflin bond. Assume Melindas marginal tax rate is 20 percent. How much implicit tax does she pay on the City of Heflin bond?

2.) Chuck, a single taxpayer, earns $85,000 in taxable income and $10,000 in interest from an investment in City of Heflin bonds. If Chuck earns an additional $40,000 of taxable income, what is his marginal tax rate on this income?

3.) Chuck, a single taxpayer, earns $85,000 in taxable income and $10,000 in interest from an investment in City of Heflin bonds. If Chuck claims an additional $40,000 of deductions, what is his marginal tax rate on this income?