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Tyler has the choice to invest in City of Bloomington municipal bonds that pay 8 % interest or Cummins Inc. corporate bonds that pay 1

Tyler has the choice to invest in City of Bloomington municipal bonds that pay

8 %

interest or Cummins Inc. corporate bonds that pay

10 %

interest. Tyler

s marginal tax rate is

32 % .

Assume that the bonds have similar risk. In which bonds should Tyler invest to maximize his after tax return?

]

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