investing in a city bond at 5.70 percent or investing in a surething incorporated bond at 9.25 percent. Assuming that both bonds have the same no tax characteristics and that Hugh has a 40 percent marginal tax rate, what interest rate does surething incorporated need to offe

Individual Income Taxes
43rd Edition
ISBN:9780357109731
Author:Hoffman
Publisher:Hoffman
Chapter5: Gross Income: Exclusions
Section: Chapter Questions
Problem 16DQ: Tammy, a resident of Virginia, is considering purchasing a North Carolina bond that yields 4.6%...
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Hugh has the choice between investing in a city bond at 5.70 percent or investing in a surething incorporated bond at 9.25 percent. Assuming that both bonds have the same no tax characteristics and that Hugh has a 40 percent marginal tax rate, what interest rate does surething incorporated need to offer to make Hugh indifferent between investing in the two bonds?
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