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Taxpayer with the higher after-tax return

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Bonds, D, Inc. bonds are selling for $1,000 each with an interest rate of 7%. Tax-exempt bonds issued by the State of Kentucky are selling for $1,000 each with an interest rate of 3%. Which bond provides a taxpayer with the higher after-tax return when the marginal tax rate is:

a. 35%?

b. 15%?

Reference no: EM13152915

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