Dana intends to invest $66,000 in either a Treasury bond or a corporate bond. The treasury bond yields 5 percent before tax, and the corporate bond yields 6 percent before tax. Assume Dana's federal marginal rate is 24 percent and she itemizes deductions. a-2. How much interest after-tax would Dana earn by investing in the corporate bond? b-1. If she were to move to another state where her marginal state rate would be 10 percent, which of the two options should she choose? b-2. How much interest after-tax would Dana earn by investing in the corporate bond as per requirement b-1?
Dana intends to invest $66,000 in either a Treasury bond or a corporate bond. The treasury bond yields 5 percent before tax, and the corporate bond yields 6 percent before tax. Assume Dana's federal marginal rate is 24 percent and she itemizes deductions. a-2. How much interest after-tax would Dana earn by investing in the corporate bond? b-1. If she were to move to another state where her marginal state rate would be 10 percent, which of the two options should she choose? b-2. How much interest after-tax would Dana earn by investing in the corporate bond as per requirement b-1?
Chapter5: Gross Income: Exclusions
Section: Chapter Questions
Problem 51P
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Dana intends to invest $66,000 in either a Treasury bond or a corporate bond. The treasury bond yields 5 percent before tax, and the corporate bond yields 6 percent before tax. Assume Dana's federal marginal rate is 24 percent and she itemizes deductions.
a-2. How much interest after-tax would Dana earn by investing in the corporate bond?
b-1. If she were to move to another state where her marginal state rate would be 10 percent, which of the two options should she choose?
b-2. How much interest after-tax would Dana earn by investing in the corporate bond as per requirement b-1?
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Step 1: Explain the difference between treasury bonds and corporate bonds.
VIEWStep 2: a-2. How much interest after-tax would Dana earn by investing in the corporate bond?
VIEWStep 3: b-1. If Dana moves to another state with a state rate of 10%, which option should she choose?
VIEWStep 4: b-2. How much interest after-tax will she earn by investing in corporate bond as per requirement b-1
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT