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A taxpayer is considering two mutually exclusive alternatives: Alternative A is tax - exempt and expected to return 7 . 5 % . Alternative B

A taxpayer is considering two mutually exclusive alternatives: Alternative A is tax-exempt and expected to return 7.5%. Alternative B is fully taxable at 15%. At what pre-tax rate of return would the tax payer be indifferent between these two alternatives, given that the risks were the same for both?

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