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Assume that Larry's marginal tax rate is 25%. If corporate bonds pay 9.6% interest, what interest rate would a municipal bond have to offer for

Assume that Larry's marginal tax rate is 25%. If corporate bonds pay 9.6% interest, what interest rate would a municipal bond have to offer for Larry to be indifferent between the two bonds?

Multiple Choice

  1. 25.00%
  2. 12.00%
  3. 9.60%
  4. 7.20%
  5. None of the choices are correct.

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