5. Manny, a single taxpayer, earns $75,000 per year in taxable income and an additional $12,500 per year in city of Boston bonds.

What is Manny's current marginal tax rate for year 2017? (Tax rate schedules)

a. 18.10%

b. 28.16%

c. 15.13 %

d. 22.57 %

e. 25.00 %

6. Leonardo, who is married but files separately, earns $230,000 of taxable income. He also has $19,250 in city of Tulsa bonds. His wife, Theresa, earns $58,500 of taxable income.

If Leonardo earned an additional $76,500 of taxable income this year, what would be the marginal tax rate on the extra income for year 2017? (Tax rate schedules)

a. 39.03 %

b. 28.78%

c. 36.28 %

d. 39.28 %

7. If Susie earns $400,000 in taxable income, how much tax will she pay as a single taxpayer for year 2017? (Tax rate schedules)

a. $104,811.20

b. $ 115,080.40

c. $ 115, 399.25

d. $ 132, 195.80

e. none of the choices are correct

8. Curtis invests $225,000 in a city of Athens bond that pays 4.25% interest. Alternatively, Curtis could have invested the $225,000 in a bond recently issued by Initech, Inc. that pays 5.5% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 28%.

What is Curtis's after-tax rate of return on the city of Athens bond?

a. 1.19%

b. 1.54 %

c. 4.25%

d. 5.50%

e. none of the choices are correct.

9. Curtis invests $800,000 in a city of Athens bond that pays 10.00% interest. Alternatively, Curtis could have invested the $800,000 in a bond recently issued by Initech, Inc. that pays 12.50% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 28%.

How much explicit tax would Curtis incur on interest earned on the Initech, Inc. bond?

a. $72,000

b. $28,000

c. $22,400

d. $ 57,600

e. none of the choices are correct

10. Jackson has the choice to invest in city of Mitchell bonds or Sundial, Inc. corporate bonds that pay 5.4% interest. Jackson is a single taxpayer who earns $45,000 annually. Assume that the city of Mitchell bonds and the Sundial, Inc. bonds have similar risk.

What interest rate would the city of Mitchell have to pay in order to make Jackson indifferent between investing in the city of Mitchell and the Sundial, Inc. bonds for year 2017? (Tax rate schedules)

a. 4.05%

b. 5.40%

c. 4.55%

d. 3.75%