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A corporation in a 40% tax bracket invests in the preferred stock of another company and earns a 5% pretax rate of return. An individual

A corporation in a 40% tax bracket invests in the preferred stock of another company and earns a 5% pretax rate of return. An individual investor in a 20% tax bracket invests in the same preferred stock and earns the same pretax return. The after-tax return to the corporation is ________, and the after-tax return to the individual investor is ________.

4%; 4%

4.56%; 5%

4.39%; 4.5%

3.96%; 4.5%

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