Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(I provided both parts of the question so as to not leave anything out, please help me with b-1 and b-2.) Dana intends to invest

(I provided both parts of the question so as to not leave anything out, please help me with b-1 and b-2.)

Dana intends to invest $30,000 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.

  • Corporate bond

  • 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.)

Interest After-tax: $1300

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? Assume that Dana itemizes deductions.

  • Corporate bond

  • Treasury bond

b-2. How much interest after-tax would Dana earn by investing in the corporate bond as per requirement b-1? (Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Finance In A Canadian Setting

Authors: X. Lusztig, X. Schwab

4th Edition

0409806021, 1483106330, 9780409806021, 9781483106335

More Books

Students also viewed these Finance questions