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Hugh has the choice between investing in a City of Heflin bond at 6.8 percent or investing in a Surething Incorporated bond at 9.8 percent.

Hugh has the choice between investing in a City of Heflin bond at 6.8 percent or investing in a Surething Incorporated bond at 9.8 percent. Assuming that both bonds have the same nontax characteristics and that Hugh has a 40 percent marginal tax rate, in which bond should he invest?

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