15. LO.2, 11 Harper is considering three alternative investments of $10,000. Harper is in the 24% marginal tax bracket for ordinary income and 15% for qualifying capital gains in all tax years. The selected investment will be sold at the end of five years. The alternatives are:

• A taxable corporate bond yielding 5.333% before tax and the interest reinvested at 5.333% before tax.

• A Series EE bond that will have a maturity value of $12,200 (a 4% pretax rate of return).

• Land that will increase in value.

The gain on the land is classified and taxed as a long-term capital gain. The interest from the bonds is taxed as ordinary income: the interest from the corporate bond as it is earned annually, but that from the Series EE bond is recognized only upon redemption.

How much must the land increase in value to yield a greater after-tax return than either of the bonds? For this analysis, ignore the effect of property taxes on the land. Use the future value tables in Appendix E as needed for your calculations and comparisons. Present your answer using Microsoft Excel or another spreadsheet.