You are the chief financial officer of The Oakley Corporation (TOC). You must decide how to use $100,000 in excess funds that TOC has available to invest. One option is to pay off a short-term note on which TOC is paying 11 percent interest. Another option is to purchase a municipal bond which is yielding 8.5 percent interest, tax-free. A third option is to invest the $100,000 in an experimental process designed to reduce TOC's production costs. The research department expects that the process will only reduce costs by $84,000; however, the expenditure will generate a tax deduction of $100,000 and a tax credit of $20,000. Which use of the money should you choose if TOC's marginal tax rate is 15 percent? 25 percent? 34 percent? Marginal Tax Rate 15% 25% 34% Option 1: Payoff short-term note Before-tax Savings Increase in after-tax cash flow Option 2: Buy Tax-exempt Bond Increase in after-tax cash flow Option 3: Research Expenditure Cash outflow for expenditure Reduced costs Tax credits generated Overall Increase in after-tax cash flow