1. Sena invests $250,000 in a city of Louisville bond that pays 7 percent interest. Alternatively, she could have invested the $250,000 in a bond recently issued by Microsoft, Inc. that pays 9 percent interest with similar risk as the city of Louisville bond. Assume that Sena's marginal tax rate is 24 percent. What is Sena's after-tax rate of return on the city of Louisville bond?

   		5.32 percent
   		9.00 percent
   		6.84 percent
   		7.00 percent
   		None of the choices are correct

2. Aimee has found it very difficult to repay her loans. Because of these difficulties, her creditor decided to forgive one of her most recent loans, an amount of $45,000. After the loan was discharged, Aimee had total assets of $232,000 and her remaining loans totaled $217,000. What amount must Aimee include in her gross income?

   		$30,000
   		$45,000
   		$15,000
   		$28,000
   		$0Aimee was not solvent when the loan was discharged

3. Regardless of when a divorce agreement is executed, alimony is included in gross income of the recipient and is deductible for AGI by the payer.

   True

   False

4. When an attorney provides $100 of services in exchange for $100 of grass cutting services, the atorney does not have $100 of income because cash was not received.

   True

   False