After tax rate of return for the city of vacaville bond

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Mitch invests #200,000 in a city of Vacaville bond that pays 6 percent interet. Alternatively, Melinda could have invested the 200,000 in a bond recently issued by sincething Inc. that pays 8 percent interest with similar risk and other nontax characteristics to the City of Vacaville bond. Assume Melinda's marginal tax rate is 25 percent . 1. What is her after tax rate of return for the City of Vacaville bond? 2. How much explicit tax does Melinda pay on the City of Vacaville bond? 3. How much implicit tax does she pay on the City of Vacaville bond? 4. How much explicit tax would she have paid on the Sincething Inc. bond? 5. What is her after tax rate return on the Sincething Inc. bond?

Reference no: EM131248185

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