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Hugh has the choice between investing in a City of Heflin bond at 6 percent or investing in a Surething Incorporated bond at 9 percent.
Hugh has the choice between investing in a City of Heflin bond at 6 percent or investing in a Surething Incorporated bond at 9 percent. Assuming that both bonds have the same nontax characteristics and that Hugh has a 40 percent marginal tax rate, what interest rate does Surething Incorporated need to offer to make Hugh indifferent between investing in the two bonds? Interest rate 9%
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