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Curtis invests $725,000 in a city of Athens bond that pays 9.50% interest. Alternatively, Curtis could have invested the $725,000 in a bond recently issued
Curtis invests $725,000 in a city of Athens bond that pays 9.50% interest. Alternatively, Curtis could have invested the $725,000 in a bond recently issued by Initech, Inc. that pays 11.50% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 28%. If Curtis invested in the Initech, Inc. bonds, what would be his after-tax rate of return from this investment?
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