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An investor has the option to purchase one municipal bond and one corporate bond that pay rates of return of 5% and 6.1%, respectively. If

An investor has the option to purchase one municipal bond and one corporate bond that pay rates of return of 5% and 6.1%, respectively. If the investor is in the 20% tax bracket, which bond will be a better one to invest? [Hints: Think about (i) which bond is tax-exempt and (ii) whether higher or lower interest is better. Use the formula rTaxExempt=rtaxable(1-TaxRate)image text in transcribed to find the equivalent tax-exempt rate.]

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