Anastasia wants to invest $1.5M. Based on her income she is currently in the 33% tax bracket for ordinary income and in the 15% bracket for long-term capital gains. Her tax brackets for state income tax purposes are 7% and 0% on long-term capital gains. Consider the following situations: Situation 2 Situation 2 Corporate Municipal Type Bonds Bonds Time horizon 5 years 7 years 11% interest 6.5% interest Income annually annually Discount rate 5.5% 5% Repayment/Sale Repaid after 5 Repaid after years 7 years Taxable at Not taxable for federal ordinary income tax Comments income tax but state income tax of rates; no state income tax 7% applies Requirements: Determine the net present value of the after-tax cash flow for: (1) Situation 1: (2) Situation 2