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Corporation has an average tax rate of 25% and a marginal tax rate of 39%. The corporation invest in a tax-free project with an expected
Corporation has an average tax rate of 25% and a marginal tax rate of 39%. The corporation invest in a tax-free project with an expected before-tax return of 6.8% or in a taxable project ch an expected before-tax return of 10%. The corporation should elect one: a. b. Invest in the tax-free project because the after-tax return is greater Be indifferent between the two investments because the after-tax returns are the same. c. Invest in the taxable project because the return is greater d. Invest in the taxable project because the after-tax return is greater
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