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Assume that Lavonia's marginal tax rate is 20%. If a city of Tampa bond pays 6.8% interest, what interest rate would a corporate bond have

Assume that Lavonia's marginal tax rate is 20%. If a city of Tampa bond pays 6.8% interest, what interest rate would a corporate bond have to offer for Lavonia to be indifferent between the two bonds?

Multiple Choice

20.00%

9.80%

8.80%

5.80%

8.50%.

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