Question
Dana intends to invest $34,000 in either a Treasury bond or a corporate bond. The Treasury bond yields 5 percent before tax and the corporate
Dana intends to invest $34,000 in either a Treasury bond or a corporate bond. The Treasury bond yields 5 percent before tax and the corporate bond yields 6 percent before tax.
a-1. Assuming Danas federal marginal rate is 24 percent and her marginal state rate is 5 percent, which of the two options should she choose? Assume that Dana itemizes deductions.
multiple choice 1
a. Corporate bond
b. Treasury bond
a-2. How much interest after-tax would Dana earn by investing in the corporate bond? (Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)
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