Question
Curtis invests $775,000 in a city of Athens bond that pays 9.75% interest. Alternatively, Curtis could have invested the $775,000 in a bond recently issued
Curtis invests $775,000 in a city of Athens bond that pays 9.75% interest. Alternatively, Curtis could have invested the $775,000 in a bond recently issued by Initech, Inc. that pays 12% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24%.
What is Curtis's after-tax rate of return on the city of Athens bond?
Multiple Choice
- 9.59%
- 8.07%
- None of the choices are correct.
- 11.75%
- 9.75%
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Management Accounting Information for Decision-Making and Strategy Execution
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
6th Edition
137024975, 978-0137024971
