Question
Chappell Roan invests $380,000 in a City of Providence bond that pays 5.2 percent interest. Alternatively, Chappell could have invested the $380,000 in a bond
Chappell Roan invests $380,000 in a City of Providence bond that pays 5.2 percent interest. Alternatively, Chappell could have invested the $380,000 in a bond recently issued by Google Inc that pays 8 percent interest and has risk and other nontax characteristics similar to the City of Providence bond. Assume Chappell's marginal tax rate is 35 percent.\ \ Note: Leave no cells blank - be sure to enter "0" wherever required. Round your after-tax rate of return to one decimal place.\ \ Required:\ What is her after-tax rate of return for the City of Providence bond?\ How much explicit tax does Chappell pay on the City of Providence bond?\ How much implicit tax does she pay on the City of Providence bond?\ How much explicit tax would she have paid on the Google Inc bond?\ What is her after-tax rate of return on the Google Inc bond?
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