Dana intends to invest $40,000 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. Assume Dana's federal marginal rate is 24 percent and she itemizes deductions.

Required:

a-1. Assuming Dana's marginal state rate is 5 percent, which of the two options should she choose?

a-2. How much interest after-tax would Dana earn by investing in the corporate bond?

b-1. If she were to move to another state where her marginal state rate would be 10 percent, which of the two options should she choose?

b-2. How much interest after-tax would Dana earn by investing in the corporate bond as per requirement b-1?