Problem 3-9 (LO. 8) HippCo and HoppCo operate in the same industry and report the following tax rate reconciliations in their tax footnotes. HippCo HoppCo Hypothetical tax at U.S. statutory tax rate 21.0% 21.0% State and local taxes 2.7 3.9 Municipal bond interest (12.5) (7.8) Tax Court settlement on disputed tax issue 6.0 Effective tax rate 17.2% 17.1% Indicate whether the following statements are "True" or "False" when comparing the two companies. a. In the area of state and local taxation, HoppCo is paying a slightly higher average rate. This may be a function of the states within which HoppCo operates. b. HippCo is generating substantially more tax savings than HoppCo by holding municipal bonds. This may be the result of targeted investment planning by the entity. c. If HippCo removes the one-time item for the court settlement, its effective tax rate would be significantly higher than HoppCo's rate.