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Karen Smith is in the 40 percent personal tax bracket. She is considering investing in HCA (taxable) bonds that carry a 12 percent interest rate.

Karen Smith is in the 40 percent personal tax bracket. She is considering investing in HCA (taxable) bonds that carry a 12 percent interest rate. Suppose that Twin Memorial Hospital has issued tax-exempt bonds that have an interest rate of 6 percent. With all else the same, should Karen buy the HCA or Twin Memorial bonds?

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