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Assume that John's marginal tax rate is 40%. If a city of Austin bond pays 5.70% interest, what interest rate would a corporate bond have
Assume that John's marginal tax rate is 40%. If a city of Austin bond pays 5.70% interest, what interest rate would a corporate bond have to offer for John to be indifferent between the two bonds?
Multiple Choice
- 28.50%
- 9.50%
- 5.70%
- 3.42%
- None of the choices are correct.
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