Bill and Mercedes (marginal tax rate 35%) who owns a business hires their daughter Margaret (marginal tax rate 10%; age 16) and pay a salary of $7,000. What is the familys possible tax saving through the income-shifting strategy (ignore any Social Security, Medicare, or self-employment tax issues)?

A. $1,750.

B. $700.

C. $2,450.

D. $0.

E. $7,000.

Assume that Tom Brady's marginal tax rate is 24%. If corporate bonds pay 8.4% interest, what interest rate would a municipal bond have to offer for Tom to be indifferent between the two bonds?

A. 24.00%.

B. 10.02%.

C. 8.40%.

D. 6.38%.

E. None of the choices are correct.